Are you paying too much for your insurance in the UAE?

Sponsored: The UAE’s insurance industry is booming and is expected to reach $18.bn by 2021, according to Alpen Capital.

The sector has also seen a rise in insurance providers, largely due to the mandatory health insurance policy that is in place in both Abu Dhabi and Dubai.

From a consumer’s point of view, many in the UAE are often contacted tirelessly by insurance agents and brokers, offering all kinds of insurance promising attractive benefits.

Often, many also sign long contracts with definitions and clauses that they don’t understand. But when faced with a problem, many consumers are left in the deep-end, without any help.

According to Hadi Radwan, the chief product officer of insurance listing site Aqeed, the company gathered three main observations from its customer research.

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Observation #1: No one wants to pay for unnecessary coverage

Insurance and uncertainty are best friends and industry experts try to use this to customers’ disadvantage, opines Radwan.

“To prove that, we sat with a few people and found out that no one wants to buy insurance coverage that they don’t need. People are too busy to shop for information because of the complex jargon, information asymmetry, and long contracts to be read. So, customers have always trusted someone else to do this for them. However, those selling you insurance want to make sure that you buy more from them, so they can benefit as well,” he explains.

“In one instance, a client bought an insurance cover for his car and was upsold by his broker two additional benefits: car replacement and term-life insurance, both of which he didn’t need. When it comes to adding the car replacement benefit, be careful not to overpay.

“Although such a benefit is relatively inexpensive, it can add up over the life of your contract. As for the term life insurance, the person was single and has no dependent, rendering life insurance almost useless,” he adds.

Observation #2: We tend to underestimate the impact of large unforeseen losses on our life

People prefer to avoid losses rather than acquire gains of equivalent value, because psychologically the pain of loss is two times more powerful as the pleasure of gain, according to an academic study.

However, the pain of loss varies with the magnitude of the event, and there are certain events that break you – including those that are unpredictable, explains Radwan.

“People tend to underestimate the impact of such events. So, they don’t protect themselves against them,” he says.

“Make sure that when you protect yourself, you consider the large losses arising from unforeseen events such as a fire wiping out your home and its belongings, a car crash that scraps your whole car, or the loss of your wedding ring or jewellery.

“Unfortunately, insurance cannot compensate for the emotional loss that comes along with the loss of a partner, health or an asset. However, it can elevate some of the financial consequences associated with such a loss,” he says.

“Don’t fall into trap of paying less today for a lower level of future protections against these events,” Radwan adds.

Observation #3: People overpay for insurance without realising it

Customers get flooded with insurance offers and sometimes buy a product without realising that they might already have it.

For example, a life insurance policy might have personal accident cover. Yet some people buy it with their car insurance policy.

“Every time I try to book my next flight, I receive a follow-up email asking if I want to buy travel insurance from at least four companies. This sort of email marketing sometimes catches us at the right moment and we get sucked into buying something we don’t need,” says Radwan.

How Aqeed can help you

In three words: simplicity, transparency, and accessibility.

“We created Aqeed to bring the best user experience and more transparency and simplicity to the insurance industry in order to help customers make better informed decisions,” says Radwan.

People should understand the risks they face, develop a view on risk tolerance and keep a critical mind when they look to buy insurance.

At Aqeed, a comparison tool shows customers exactly how much they will be compensated in case of a total loss. Agents will also guide and explain all the covers before customers make a final decision.

“We have also created Aqeed Safe, a digital insurance folder where you can store all your current insurance contracts (bought from our platform or from another source) in one place,” explains Radwan.

“Once you upload your contracts there, we will remind you when your renewal is due for each of your contracts. Also, our insurance experts will check your contracts once a year, for free, to make sure you are getting the right coverage at the right price, and not overpaying for covers you don’t need.

“While insurance will not deter the terrible things from happening in your life, it will, help you overcome the financial burdens associated with it. Always have this safety net in place to allow you to spend your time with the loved ones free of worries,” he advises.

Visit aqeed.com for more information