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Okay ladies and gents – the agency repair phenomenon is something you must understand properly in order to take an informed decision. It’s an industry in crisis and more expensive certainly does not mean more value – however, this does not mean that you may go ahead with non-agency repair coverage in all cases. Let me explain right from the beginning. Don’t panic though – once you’ve understood how things work it all becomes quite simple really!
When you buy your car insurance in the UAE, the insurer promises you that they would take the responsibility of the financial cost that arises in the event of an accident on the road, relieving you from this significant exposure – hurrah! (I love insurance.) However, unlike most other kinds of insurance, the insurer does not write a cheque out to the policyholder in the event of such a loss – they would actually have the repairs of your damaged vehicle carried out themselves, through one of their affiliated workshops. Why? Good question:
As there are well over a million vehicles on the roads of the UAE, the market for motor insurance is huge (since it is mandatory) and this means that the volume of claims made to the insurance company (as a result of road accidents), on a daily basis, is also huge. Since the insurance company is literally footing the bill of all these accidents, they would obviously want to minimize their cost and also avoid any loopholes in the system that may motivate fraud. Therefore, they work with the garages that repair cars and have your cars repaired for you – you can also take it as a value-added service. Since the garages receive business from one source (i.e. the insurance company) in very significant volumes, they can afford to drastically bring down their rates due to scale economies. In addition, since the proximity of the insurance company to the cost incurred increases, they are able to be closely involved in the process to make sure that there is no waste, exploitation or fraud.
Now, another phenomenon that you must understand is that authorized dealers – as in most countries, sell most makes of cars in the UAE. Each make has only one dealer either for the whole country or at least for an Emirate or group of Emirates. So, for example, the authorized dealers for Toyota in Dubai are Al Futtaim and Mercedes in Abu Dhabi is Emirates Motor Company. These organisations are not only responsible for selling you your brand new shiny car that smells incredible, but also have the infrastructure to service the vehicle on a regular basis and… repair the vehicle in the event of an accident!
So it is widely understood that agency repair cover (i.e. an extension to your car insurance policy that guarantees that the authorized dealer of your vehicle would repair your car in the event of a claim) means that you are guaranteed that genuine parts (and usually brand new parts) would be used to repair your vehicle and since those people are responsible for all of the cars of that make on the road they know the vehicle well (and the automaker usually tends to closely supervise their work for quality control in order to protect their brand name) and hence will be able to diagnose every issue well and thereafter provide the best solution for your repair. Wonderful.
But this is only the beginning of the story. You must understand that there are two major issues when it comes to agency repair – both arising from the fact that the dealers have a monopoly (sort of) for their makes. Firstly, it’s the cost of having agency repair cover: since the repairs are significantly more expensive at the agency the insurance company makes sure that they collect enough overall premium in order to be able to create a fund that adequately finances these repairs. You will usually pay significantly more for agency repair coverage.
Secondly, it’s the time taken to repair. Any monopoly struggles to give good service – it’s understood as a principle of basic economics. It is commonplace to hear stories of the agency staff being inconsiderate, unhelpful and slow purely because of the volume of work that they have – the key motivator for this is that the customers have nowhere else to go for their offering – which is true. Also, while the dealers are governed by the makes that they represent, the UAE is a small part of the global auto industry and because changing a dealer imposes a huge cost in terms of transition and reputation, we never hear stories of automobile companies deciding to change agencies (which actually could create some competition and therefore improve service).
To add to this, non-agency workshops are in a competitive marketplace. For them, it’s all about customer retention and their USP therefore has to be outstanding quality of work and service (rather than the brand name of a German car brand) or, in the case of shoddy places, price. It is for this reason that it is sometimes surprisingly easier and more effective to work with non-agency workshops.
Moreover, many workshops have been setup by the workshop managers of the agencies themselves, which means that the same systems and processes are carried out; hence the standard of work is exactly the same as the agency for that car make. The well-reputed insurance companies actually provide such A-grade workshops to their non-agency clients as a means to ensure long-term customer retention! Similarly, shoddy companies that offer cheap policies work with shoddy garages because they’re cheaper. Ah – this is so interesting!
So here are Alfred’s rules of thumb when it comes to agency repair:
If your car is brand new then you’re supposed to have agency repair free with your comprehensive insurance cover – regardless of which insurance company you’re insuring with – full stop.
If you’ve been claims free fore more than three years, you’re going to be eligible for ‘executive’ coverage from one of the leading insurers which would include free agency repair coverage, as a reward for driving so safely. In this case, it’s free so you’d might as well go for it! (Though you could actually save some money if you went for standard rather than executive coverage as you’d still get the No Claims Bonus anyway – so do look at both options and see if there actually are significant cost implications).
If your car is not brand new but under a warranty or extended warranty from the dealer, you’d might as well go for agency repair as non-agency repair in the event of an accident may void your warranty.
If you’re going for a reputed, tried and tested insurance company like any one of insurancemarket.ae’s partner companies (hint!), then you would be guaranteed repairs and we have made sure that the cars on non-agency coverage go to A-Grade non-agency workshops. In addition, your repair would also be supported by a 6-month guarantee to give you complete confidence that your insurance provider and workshop takes complete responsibility for their work. In all likelihood, since these workshops are not monopoly-like setups, they would ensure that your repair is done quickly and to the highest standards so that they may win you as a customer for your vehicle maintenance! You won’t have to wait for weeks to have your simple damage repaired just because the agency has no time…
If you’re going for a dodgy insurance company (which I wouldn’t recommend but I do believe in free will!) then you should at least choose agency repair coverage (if they actually offer that cover) if you want to ensure proper repairs – you don’t want your Honda Accord to come back looking like a Camry or something! Or even worse, you don’t want your car to sell for far less after the accident because of the quality and age of the parts used when it was repaired after an accident. Or the worst of all, you don’t want your car to become a hazard to your and your family’s life while you’re on the road.
If your car is more than five years old, it’s unlikely that any insurance company would offer you agency repair coverage (and you really don’t need it), so stop grumbling and get on with it! You’ll be just fine as long as you choose the right insurance provider!
Alfred is the wonderful brand mascot of insurancemarket.ae where you can find the best insurance deals in the UAE with a commitment to outstanding claims service. We work only with the leading insurance companies in the UAE like AXA, Chartis, Fujairah National and Salama Takaful.