The expectation of UAE motor insurance premiums stabilising in early 2025 has not materialised for UAE car owners. While many hoped for relief, insurers continue to take a cautious approach, pricing policies based on last year’s claims experience and financial performance. This trend reflects broader market corrections that have been shaping UAE motor insurance premiums and the overall motor insurance sector over the past two years.
At InsuranceMarket.ae, we closely monitor these developments to provide customers with a clear understanding of what’s driving UAE motor insurance premiums and what they can expect in the months ahead.
The impact of the April 2024 floods
The severe flooding in April 2024 played a major role in driving up UAE motor insurance premiums. The large number of claims filed for flood-damaged vehicles put significant financial pressure on insurers, leading them to revise their pricing strategies. To offset these unexpected losses, insurers made adjustments to premium rates across the board.
Vehicles that suffered flood damage experienced the sharpest increases, with renewal premiums seeing significant jumps. However, even cars with no claims were not entirely spared, as policyholders faced higher rates based on factors like vehicle age, model, and insurance history. These adjustments were necessary for insurers to manage their financial exposure following an exceptionally high volume of claims.
A silver lining for EV owners
While traditional fuel-powered vehicles continue to see rising premiums, electric vehicles (EVs) have shown more stability in their insurance costs. EVs were among the most impacted by the 2024 floods due to the high cost of battery repairs and replacements. Recognising this additional risk, insurers had initially raised EV premiums significantly.
However, in 2025, premium adjustments for EVs have been more moderate, with increases ranging between 7%-10%. In some cases, policyholders with no previous claims have even seen stable or slightly lower renewal rates. This suggests that insurers have refined their pricing approach for EVs, basing premiums more on real claims data rather than broad estimates.
What’s next for UAE motor insurance?
While no immediate relief is expected for policyholders, the market may see a gradual stabilisation of rates as insurers adjust their risk exposure and claims data normalises.
At InsuranceMarket.ae, our commitment is to help customers navigate these changes, ensuring they receive expert guidance and access to the best possible coverage options.
Looking ahead
The UAE insurance industry is undergoing a critical shift, balancing sustainability, risk management, and long-term market stability. The rising premiums over the past two years reflect insurers’ need to align pricing with actual risk exposure and claims trends. While this may seem like a challenge for policyholders, it is a necessary adjustment to ensure the financial health of the industry.
As insurers continue refining their pricing models, we anticipate a more measured approach to premium adjustments in the coming months. Market stabilisation will depend on evolving claims data, economic factors, and regulatory developments.
At InsuranceMarket.ae, we remain focused on keeping customers informed, providing expert insights, and helping them navigate these industry-wide changes. Our role is to make sure that policyholders receive transparent, reliable guidance so they can make the best insurance decisions for their needs.
Final takeaway
Although UAE motor insurance premiums remain elevated in early 2025, UAE car owners can take proactive steps to manage their insurance costs effectively. Exploring competitive rates, reviewing policy terms, and optimising coverage can significantly impact long-term savings.
At InsuranceMarket.ae, our dedicated advisors are here to assist customers in securing the right policy, whether it’s finding the most cost-effective plan, understanding coverage options, or identifying potential savings.
For now, patience is essential, but the industry is evolving, and adjustments will continue as insurers analyse claims trends and refine their pricing strategies. We remain determined to support our customers through these changes, ensuring they stay informed and well-prepared.
