by Mobin Pandit
Insurance companies are being increasingly accused by car owners of monopolistic practices and taking them for a ride even as the government has recently upped premiums for ‘third-party’ cover, which no insurance provider can actually refuse to
a customer in keeping with Qatar’s laws.
Insurance providers take a frustratingly long time to process requests for repair of cars damaged in accidents and ask owners to share the cost of spare parts even if they had no role in the mishap and were, in fact, victims of someone else’s fault.
Nearly all insurance firms have a list of garages where a customer must go for repair of a damaged vehicle and he has no say at all in selecting repair facilities.
Most insurance companies have begun to avoid providing third-party motor cover and have come up with novel ideas to discourage customers from approaching them for the mandatory policy.
One company has, for instance, shifted its motor insurance branch to the Industrial Area and issues only limited coupons to waiting customers in a day, in what presumably is a bid to keep customers at bay.
Logically, a car owner, with either full or partial motor cover, should be given a vehicle by the underwriting company until his damaged car is repaired and handed back to him. But in Qatar, that is a dream, say car owners.
Vehicle owners have for long been calling for the Interior Ministry (under whose jurisdiction the Traffic Department falls) to set up an independent regulatory body to oversee insurance companies exclusively with regard to their ‘third-party’ insurance services, but to no avail.
In fact, currently there is no separate regulatory body to monitor the overall functioning of the insurance industry in the country itself.
“It’s akin to a jungle rule. There is no state agency to keep checks on insurance companies in the country. No one knows how they work,” says a lawyer not wanting to be named.
Presently, there is no law that regulates the relationship between an insurance provider and its customer (car owner), says lawyer Khalifa Jassem Eisa Al Haddad.
“So, insurance providers are operating on their whims…There is no monitoring…There is no control over them,” he adds. as a matter of fact.
The problem, according to Al Haddad, stems from the fact that there is no contract between an insurance provider and a car owner when the latter buys cover.
“The paper one signs with an insurance firm at the time of buying a policy — whether full insurance or third-party cover — is a brief one-sided offer (made by the company).”
No one reads the ‘offer letter’ and even if one does, one is helpless as one can do nothing to change its clauses, says Al Haddad. “It’s like a letter a bank hands to a customer who is seeking a loan.”
No one complains against insurance companies because one has signed their ‘offer letter’ and is legally bound to conform to the terms and conditions mentioned therein.
“So what we need is a contract — and a detailed one at that — which fixes the rights and responsibilities of both the parties: the insurance provider and the policy holder,” says Al Haddad. “That, I think, is the only solution to the problems faced by the insured.”
Insurance companies say they have their own woes which are being made worse with each passing year as the automobile population in the country has been increasing rapidly, while their number (insurance providers) remains the same.
The companies say an estimated 100,000 new vehicles come on Qatari roads every year and third-party motor insurance being legally mandatory for every automobile, they have been facing huge problems.
The motor insurance segments of their businesses have been suffering losses due to what they claim are low premiums and high overhead costs and claims.
Claims for car damages, deaths and injuries have been on the rise with the number of vehicles multiplying every year. This means that court cases— for claims as well as for blood money in the case of those dead — are also aplenty.
So, the legal departments of insurance companies must increase their staff size which leads to a rise in their overhead costs. There are traffic courts and they decide the accident cases but for each claim for damages that exceeds QR10,000, an insurance company moves the mainstream court. All blood money claims go to the mainstream court. Nevertheless, if insurance firms report increasing profits year-on-year it is because they are able to offset the losses suffered by their motor insurance business, industry insiders claim.
Figures show that the total net profits of the five-listed insurance providers have been hovering around the under -QR1bn mark for the last few years, unable to breach the magical level.
The collective net profits of the sector totalled a little less than QR831m in 2009, up barely seven percent the next year to QR889m. In 2011, the profits inched up by 5.17 percent to QR936.22m.
The sector seems to be in trouble this year as their three quarters (January to September 2012) net profits of QR639.34m are down 8.67 percent over the same period of 2011 when the figure was a little over QR700m.
At least three of the five Qatar Exchange (QE)-listed entities have reported net profits for the first nine months of this year that are less than those of the corresponding period last year. So, it is next to impossible for the sector to report net profits in excess of a billion riyals this year, too, say analysts.
No one knows the ratio of motor insurance segment of the sector to their overall underwriting business but industry insiders say it should be fairly large, if not substantial. Lawyers and those concerned with consumer rights nevertheless insist that since motor insurance is basically a public service, insurance firms that make a lot of money from other underwriting activities should repair their record on this front.
