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Future of Car insurance with self-driving cars


According to a study prepared by EY Corporation titled “The Global Revolution in the Electric and Self-Driving Cars Industry,” the data showed that the value of vehicle insurance will exceed $700 billion by 2050, and this will bring about a qualitative leap and fundamental change in the automotive industries during the next 5-10 years. Contrary to what has been the practice of this traditional market over the past fifty years, noting at the same time, however, that the introduction of electric and hybrid power technology in cars is closer than what investors imagine to rely entirely on self-driving vehicles during the next few years.

Thanks to the use of the latest innovations and technological means in the electric car industry, such as the brakes, the system for determining the front and adjacent distances through high-precision sensors, and the parking system, it will reduce the possibility of accidents by 20%, and this is what traditional cars lack.

According to the study, insurance makers have a great responsibility to change their attitudes and programs in the vehicle insurance industry in line with modern and self-driving electric cars, and insurance products to match the variables in the auto industry, and to determine the entity to be granted the insurance policy if purchasing a self-driving car, and what are the risks What new laws and regulations will be created that will enhance the ownership of such future vehicles.

General coverage

The insurance makers in the UAE have received indications of the great transformation in the sector with all positivity, visions and future perceptions that call for the need to change the companies’ orientations in dealing with vehicle insurance, especially those that depend on new energy, putting in place new solutions that will enhance their sales and attract new customers in the coming years, including It is in line with the state's directions in the need to introduce new energy technologies in the use of electric and hybrid vehicles.

In this context, Mohamed Mazhar Hamadeh, CEO of Al Ain Al Ahlia Insurance Company, said: There is a promising future for electric cars worldwide in general and at the state level in particular, and there is an official trend to encourage the use of electric cars, and the Ministry of Energy in the UAE took the initiative The United States has encouraged the use of these cars through a strong campaign for a long time, and this campaign has begun to bear fruit, and we note the widespread use of electric cars in the country, and Al Ain Al Ahlia Insurance Company was one of the first companies that supported this trend and we have dozens of electric cars Insured by the company.

With regard to the percentage of insurance fees imposed on electric cars, Hamada said: The percentage of insurance fees for electric vehicles as well as self-driving cars varies and is subject to the subscription policy of each company and depends on technical criteria that are evaluated by the company issuing the document, and to attract customers and the public to insurance in general for electric cars in general. Special depends on the company's reputation in the market and on its commitment to pay compensation in a timely manner. We rely on the reputation and credibility of the company, which is well known in the insurance market in the country and abroad.

Hamadeh added: “The risk assessment is also done by the company’s underwriters. In the insurance world, the risk is evaluated based on the degree of risk. There is a good (insurance) risk and there is a medium or high risk, and based on the degree of risk, pricing is done, whether electric or regular cars. The company has not issued any insurance policy for self-driving vehicles, but in the future; There is nothing to prevent these vehicles from being insured, as pricing will be based on the degree of risk by paying attention to the markets that issued such documents.

For his part, Andrew Brody, Executive Vice President of the company - director of customer and insurance products at Oman Insurance Company, said: “The positive view of electric vehicles (EV) is increasing as the most appropriate solution to preserve the environment, and this is reflected in the growing sales figures for electric vehicles globally. . The Dubai government set an important precedent last August by committing to convert 10% of the government vehicle fleet to electric and hybrid vehicles. With the government laying the foundation stone for this transformation, it is only a matter of time until electric cars are accepted as a viable alternative to conventional fuel-powered cars.

Brody added: In terms of insurance, we will continue to provide the main insurance coverage for electric vehicles, such as civil liability to third parties, losses and damages, and personal accidents as stipulated in the unified vehicle insurance policy issued by the Insurance Authority. The company recently signed agreements with electric car companies to provide insurance coverage for its cars sold in the UAE. Additionally, the company's revised product will include; Coverage of charging stations and discounts on premiums for upgrades to self-driving and automated driving. “While there are some simple indications of the type of risks that electric vehicles face in other markets, they are new to the Middle East. So we will need to investigate new risks emerging in the market and provide effective solutions to manage them as efficiently as possible, although there is no history of potential risks.”

Brody pointed out that the number of electric vehicles in the UAE market is relatively limited at the moment. But with these numbers gradually increasing as well as the spread of charging stations, we can expect that there will be a higher rate of use of electric vehicles.


Vehicle safety

He added: “The government, on its part, is keen to promote smart initiatives and is quick to adopt effective technological progress in all fields, so we are likely to see semi-automatic or fully automated cars invade the market here in the future. Vehicle safety is an important part of the talk about the self-driving car market. While some insurers welcome lower accident rates, which has a positive impact on claims and profitability, they may be wary of lowering expected premiums as a result.” A long transition that will see a mix of manual, semi-autonomous and driverless cars on the road. This transition will allow insurers to carefully adapt to changing market conditions – i.e. offering protection solutions to the market that include different levels of autonomous driving capabilities, or addressing new cyber liabilities arising from the use of innovative digital technologies, or a lack of historical data to analyze or learn from, Or provide insurance products for new and advanced manufacturers' liabilities, or product recall solutions to cover technical failures. For auto insurance, this may mean some disruption, but there will also be enough opportunities to address risks, and new technology insurers will rush to analyze, design and provide effective and valuable solutions.

A source at Al Buhaira Insurance Company said that the company has issued 5 insurance policies for electric cars, some of which are specialized for sports uses, indicating at the same time that the value of insurance on electric sports cars is not less than 5% of their total price, and there is a great demand among the public. The acquisition and use of electric and hybrid cars, and this is reinforced by the aspirations and visions of the state in the necessity of using and acquiring such type of “electric” vehicles to reduce carbon emissions and preserve the environment. He continued: "Electric car spare parts remain rare in the country, and if they exist, their prices remain very high compared to traditional ones, due to their lack of presence, scarcity of use, and the importance of not using spare parts used on this type of vehicle."

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