UAE motor insurance premiums rise by 40%; lawmaker demands reforms
Motor insurance premiums in the UAE have surged by more than 40 per cent in some cases, prompting the Federal National Council (FNC) to question insurers' pricing practices and limited coverage options, especially for electric vehicles (EVs).
During a council session on Wednesday, FNC member Adnan Hamad Al Hammadi called on the Minister of State for Financial Affairs, Mohammed Al Hussaini, to clarify what steps are being taken to regulate the sector. He pointed to rising costs, reduced benefits, and mounting concerns from younger drivers and EV owners who are either being charged significantly higher rates or denied comprehensive coverage altogether.
'Insurance has become an additional financial burden,' Al Hammadi said, noting that some companies are charging double for third-party cover and imposing deductibles of up to 15 per cent.
The Central Bank of the UAE, which oversees the insurance sector, responded in writing, stating that all companies must operate within a unified pricing framework that includes both minimum and maximum rate thresholds. It confirmed that a standardised policy document is in place across the market to ensure consistency in basic coverage.
The regulator added that discounts of up to 25 per cent are permitted for electric or natural gas-powered vehicles, depending on factors such as risk and operational costs. However, it acknowledged that insurers face several technical and logistical challenges when it comes to EVs.
Among them, high repair costs, limited availability of spare parts, especially batteries, and a shortage of certified service centres are the major ones. Many EV models sold in the UAE also lack official dealerships or warranty coverage, particularly those bought through independent showrooms.
The central bank cited the 2024 flooding as a key example of risk, where water-damaged EVs were often written off entirely. It also pointed to a lack of long-term performance data for electric vehicles, which has led some insurers to adopt more conservative pricing strategies. Al Hammadi questioned whether exceptional weather events should justify sustained price hikes. 'These are rare seasonal incidents that should not affect individual premiums or driver records,' he argued.
He also flagged the practice of reducing a vehicle's insured value at renewal, which could leave policyholders at a disadvantage in the event of a total loss. Younger drivers, particularly those under 30, are also facing access issues. Despite the legal driving age being lowered from 18 to 17, some insurers have declined to provide cover for drivers in this age group — raising concerns about inclusivity and alignment with national policies.
'These gaps directly impact EV adoption and exclude a large segment of young drivers,' Al Hammadi said, calling for updates to the unified insurance document to better regulate pricing, improve access, and align with the UAE's clean energy goals.
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