With the entire world facing the pandemic challenge and resurfacing from the global recession, companies have started developing innovative mechanisms and policies to attract customers.
A significant impact of the outbreak is the lockdown, which resulted in a massive dip in vehicle purchases across the globe. With this, there was an enormous reduction in the number of trips and accidents. Now the primary question is how the car insurance industry in the UAE and worldwide will take the toll? Many ask why one requires car insurance or renew a policy when they are not driving their car?
Mr. Avinash Babur ACII, the founder and CEO of InsuranceMarket.ae has his own opinion about the impact of Covid-19 on the UAE car insurance industry in 2020 which you can read on his company website.
Reduction in Premiums
With the sale of vehicles falling drastically and to negative numbers, insurance companies are facing heavy losses. Several companies have come forward to cope with the losses and retain their customers by offering policies at reduced prices. Customers willing to buy car insurance in UAE during the outbreak can utilize the online comparison tool to check for the best policy available at a reduced price. The tool will give you the chance to alter the settings according to your requirement. For instance, you can choose the coverage requirement, the period, the declared value, and other add-ons, if required.
Similarly, a few insurance companies have started to compensate their customers by offering a partial refund due to lockdown. When we look at the customer’s perspective, both the compensation and reduction of policy pricing is a lucrative solution.
Considering Usage-based Policies
One of the significant issues highlighted due to the COVID-19 is how insurance companies decide that the payable premium is fair? Implementing the lockdown to prevent further spread of the virus made it challenging to lead a regular life. With the outbreak and the contagious virus quickly spreading, usage of the car has become paramount. Therefore, the need for usage-based car insurance in UAE is increasing, where the payable premium counts only two factors:
- The first factor is the one where the total number of kilometers or miles covered by the insured vehicle is crucial
- The second factor is the driving behavior of the insurer
Insurance companies have developed innovative products to ensure that a customer is not paying an additional amount as premium. With such a strategy, companies guarantee that they manage to generate revenue, maintain existing customers, or bring onboard new customers.
Will fewer vehicles mean less risk?
Many customers argue that the risk level is substantially low due to fewer vehicles plying on the road. Remember that the reduced premium cost from insurance companies is due to a smaller number of new vehicles coming on to the road. Additionally, with fewer clients considering buying premiums, insurance companies have innovative products to retain clients.
According to recent numbers, the number of figures of vehicles plying on the road is low. Nonetheless, there is no variation in the number of accidents or is not seeing a significant decrease. The reason is that people are driving without caution, considering that reduced vehicles are plying on the road. It is here that car insurance in UAE comes to the rescue even if one is paying a reduced premium.
The pandemic not only impacted vehicle insurance but all the major industries across the world. One the contrary, insurance companies are coming up with new and innovative policies that attract customers without having them spend more on vehicle insurance. The only way to have the best coverage is by comparing it to other available policies. Thus, it ensures that you will buy a policy that offers better protection during the pandemic and asking the right premium.