Why Do Insurance Companies Increase their Rates?

Image resource: emirates247.com

Image resource: emirates247.com

After insuring your vehicle for many years in the UAE, you take pride knowing you have always been a safe driver. No tickets, no accidents, no claims, you are the ideal customer for any Insurance Company. Being aware of your excellent driving record, you must wonder and get frustrated, because your rates seem to increase each year. Unfortunately, there are others out there that do not have respect for the road nor any Insurance Company.

So, why are your rates going up? The bottom line, it is the increasing cost of claims.  There are many factors taken into consideration before they release their new rates for the year.

While there are many variables that go into setting rates, the following gives you an idea of why the rates increase over and above what you would expect each year.

  • Fraud – This is mainly for injuries. Insurance Companies receive thousands of calls from their customers every year reporting accidents. They claim they have been injured with back and neck injuries. It turns out to be a bogus injury claim. If you think about the cost of rehabilitation, physio, and loss wages, it can add up pretty quick.
  • Stolen Vehicles. Take a look at the price of a new Mercedes these days. What these criminals are doing is taking their own vehicle that they don’t want anymore, hiding it somewhere and setting it on fire. They report it stolen, and even if the police find the vehicle, it’s totally destroyed. Now the Insurance Company reimburses him for the value of the vehicle.
  • One of the more recent types of automobile fraud is the VIN -(Vehicle Identification Number) theft. A person goes into one of the automobile junk yards pretending to be looking for a part. He is actually looking to steal a few VIN plates. These plates are usually in the corner of the windshield or inside the door. They make up a fake ownership with that VIN and call the insurance broker to add the car to their policy.  A week or two later, they call to report the vehicle was stolen.
  • The manufacturing of new vehicles on the road these days are more expensive to repair than the older models. The bumpers will crack just leaning on some of them. They are not made like they used to be. Airbags are a great safety measure however, if you are in an accident, one or more will deploy. They cost a small fortune to be replace them.
  • Weather has become a huge problem. The environment is changing day by day. It is hard to pin down where the bad weather is going to hit. Some provinces, cities and states are receiving totally unpredictable weather which in some cases, can cost an Insurance Company millions of dollars.
  • The cost of purchasing a new vehicle. All the car manufacturers try to out do the competition or at least be competitive of what they are turning out. That means installing all the new electronic toys.

It is a new generation of fast vehicles, which are loaded with high tech equipment. It would not be surprising to see the rates continue to rise this year.

As a side note, if you are that ideal driver and your rates go up this year 10%, try to remember that the worse drivers have probably seen an increase of 30-40%

Come to insurancemarket.ae to find a solution if your renewal quote has a higher rate than last year. Maybe it’s time to switch insurers!

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