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United Arab Emirates Insurance Report Q1 2012
Market |
Finance and Banking |
Report Type |
Market Research |
Country |
United Arab Emirates |
Published |
31 January 2012 |
Number of Pages |
66 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
- |
The UAE ranks as one of the larger and more dynamic of the insurance markets of the Middle East and North Africa. Over the long-term, there has been very steady growth in premiums--- thanks in part to the growth and diversification of the economy, and in part to developments such as the 2008 introduction of compulsory health insurance for expatriates resident in the country. The UAE is also one of the most important markets for takaful (ie shar? a- compliant insurance), which has been expanding even faster than the overall insurance sector.
Relative to its peers in the region, the UAEs insurance sector is also unusual in that there are two separate regulatory regimes. Offshore business is undertaken by companies that are established in the Dubai International Finance Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA). Onshore business is regulated by the Insurance Authority. Although the two regulators signed a memorandum of understanding (MoU) at the end of April 2011, an organisation that is regulated by the DFSA does not automatically have the right to undertake onshore business in the rest of the UAE.
The latest figures, published by the UAEs listed insurance companies in relation to H111 and the first three quarters of 2011, indicate that the sector as a whole is expanding at only single-digit rates. Growth would be minimal but for the explosive growth of family takaful contributions and motor contributions written by the Islamic Arab Insurance Co (Salama). Salama also stands out as one of the largest takaful operators globally.
The stagnation of gross written premiums is not a bad thing. Many of the insurance companies are responding to highly competitive conditions in an overly fragmented industry. Retention ratios have been rising – and quite sharply – relative to 2010: the companies have become a lot more choosy about the risks that they will underwrite and the price at which they shall do so. In short, net written premiums have been growing a lot faster than gross premiums. Interestingly, the vast majority of the local UAE companies appear to have been largely unaffected by the volatility in global financial markets through much of 2011. Nevertheless, we would not be surprised if there were a wave of consolidation in the UAEs insurance sector in the coming years.
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