Central Bank of UAE: Electric Vehicle Repairs Impact Insurance Pricing
The Central Bank of the UAE (CBUAE) has highlighted several technical challenges associated with electric vehicles (EVs) that directly affect their insurance pricing. Key issues include high repair costs, limited availability of spare parts, a shortage of service centers, increased accident-related claims, and a lack of long-term performance data.
In response to a query from the Federal National Council (FNC), the CBUAE clarified that insurance companies can offer discounts of up to 25% from the minimum pricing threshold for electric or natural gas-powered vehicles, depending on the vehicle’s accident history. The bank monitors vehicle insurance pricing through a unified policy system that sets minimum and maximum price limits, standardizes coverage, and ensures pricing transparency.
The UAE Insurance Federation has raised concerns about some authorized EV agencies refusing to repair or replace parts for electric vehicles purchased through dealerships rather than directly from the agencies. Mohammed Mazhar Hammadeh, Vice Chairman of the Supreme Technical Committee and Chairman of the Motor Committee at the UAE Insurance Federation, stated that this practice negatively affects insurers. He noted that showrooms operate legally in the UAE and often offer EVs at lower prices than official agencies, making them attractive to consumers.
Hammadeh highlighted growing complaints from policyholders about certain agency practices, including charging excessive fees to open a service case or outright refusing to conduct repairs. Such practices complicate matters for insurers when accidents involve showroom-bought vehicles covered under existing policies. He stressed that insurance companies are responsible for covering the cost of spare parts, not sourcing them.
The issue is critical not just for insurance companies but also for buyers seeking the best value when purchasing a car. Hammadeh warned that when an agency refuses to repair a vehicle, policyholders often blame the insurance company and demand the car be written off, even if repairs cost less than Dh1,000, leading to financial losses for insurers.
