An increasing number of insurance companies in the country have agreed to share driver accident history to help identify a potential client’s risk of filing a claim.
UAE insurers share information on dodgy drivers
ABU DHABI // An increasing number of insurance companies have agreed to share driver accident history to help identify a potential client’s risk of filing a claim.
Of the 62 insurance companies in the UAE, 35 offer motor- vehicle insurance. So far, 26 share a database that ranks drivers so the companies can adjust premiums accordingly.
Accident histories can help companies to charge fairer premiums based on risk profile and prevent fraudulent claims. For instance, a driver with many accidents poses a greater risk, and is therefore more likely to pay a higher premium, than a careful driver.
“Almost all companies using our system could see that individuals were involved in two to four accidents so they are able to determine the drivers’ risk potential,” said Pascal Persoon, chief executive of eData Management Solutions in Dubai, developers of the system, which went live in October.
“Some saw a big rise in ‘newcomers’ but then found out through the system that those potential clients had been involved in a recent accident.
Mr Persoon said people who caused accidents often moved to a new insurance company as soon as possible to get a lower premium.
Drivers tend to hide material facts, such as accidents, in exchange for a cheaper premium, said Alison Fenech, head of general insurance at Nexus Insurance Brokers.
“What they forget is that in the event of a claim, and should the insurer discover that this material fact has not been disclosed, it may avoid paying for the property damage incurred during that accident,” she said. “With eData, this can be eliminated altogether at the initial stage of the quotation.”
A shared database that is readily available to insurers means premiums will be based on more accurate information, said Munmun Lamba, marketing and communications manager at Gargash Insurance.
“People with poor driving experience will need to pay more for purchasing their insurance over a period and will be more willing to adopt safer driving habits resulting in reduced accidents,” she said. “Safe driving habits, on the other hand, will get positive reinforcement by way of lower premiums.”
Without such a database, insurers could opt to raise their premiums across the board, forcing good drivers to make up for bad ones, Ms Fenech said.
“When careless drivers, who are experiencing more accidents than others, pay more than others because of their behaviour, they will tend to drive more carefully,” said Dr Salaheddine Bendak, an associate professor at the University of Sharjah.
“This will lead to fewer accidents and fewer claims, as research in many countries has shown.”