UAE Insurance Sector Approaching Stabilising Growth

After going through the setbacks that the Covid-19 pandemic brought in, the UAE insurance industry is back on its way to the top, not only in GCC but the global insurance market as well. Moreover, the insurance market of the United Arab Emirates is one of the key contributing sectors to the economic growth of the country. Additionally, while UAE held its ground in Covid-19 better than most developed and developing nations worldwide, the insurance sector saw several dilemmas. For example, from the initial shock of pandemic-related health insurance claims to insurers' financial failures, the initial pandemic period was as bad for the emirates as it was for the rest of the world. However, the UAE insurance industry has picked itself up again after two years and regained its old position as GCC's largest insurance market.

Market Share of UAE Insurance Industry

As aforementioned, UAE now holds a significant 43.7% of the total gross written premiums collected by insurance markets in the GCC, making it the biggest insurance market in the MENA region. Furthermore, Saudi Arabia holds second place in this race, followed by Kuwait in third place. Subsequently, the global ranking for the UAE insurance market in terms of GWC stands at rank 36 for 2020. The key players contributing to the levels of growth of the UAE insurance industry include:

  • The new, more flexible immigration policies and labour laws,
  • Better work environment creation,
  • Government's initiative to invest more in the infrastructural needs of the country and the new regulations to solve the insolvency crisis for small insurance firms. 

Growth Prospects for 2022-2025

The UAE insurance market is expected to see compound annual growth of 4.1% between 2021 and 2026. In addition, motor and health insurance are the two highest premium generating products of the UAE insurance industry. Over and above, the motor insurance sector of the UAE is expected to see a CAGR of 3% from 2021 to 2026, and the health insurance industry of the UAE is set to see a CAGR of a whopping 16.5% from 2019 to 2024. Along with that, Kuwait is expected to grow at 5.3% CAGR, and Saudi Arabia may witness a 1.6% CAGR growth rate between 2021 and 2026. 

In monetary terms, the GCC insurance industry will grow boundlessly to become a $36.1 billion industry in the upcoming years. For good measure, the value of the GCC insurance industry stood at $11.4 billion in 2020. However, the life insurance industry of the Gulf is expected to increase to $4.6 billion industry with a 3.8% CAGR growth. Adding to that, the non-life insurance industry of the Gulf will become a $26.5 billion industry by 2026 with 3.1% CAGR growth.

Key factors that Indicate UAE Insurance Sector Growth

The three listed situations mentioned below indicate that the insurance sector will see an inflow of business in great volumes:

  • There has been a remarkable hike in lifestyle diseases like lung and live diseases.
  • Adding to this are the increasing rates of medical services and per capita expenditure on health services.
  • In addition, the changed labour laws of the UAE and shortened work week.

Potential New Introductions

The plight of the Covid-19 pandemic brought several things about the UAE insurance industry to light. While there are certain fallbacks present in any business module, large or small scale, the flaws of the UAE insurance industry proved to be quite unprofitable. In fact, more than a 3% decline was recorded in the growth of UAE's insurance industry in the year 2020. Into the bargain, the UAE insurance sector gets most of its premium collection from motor and health insurance which are the only two mandated insurances for immigrants. Since the immigrant population fell quite a lot after the pandemic, the premium collection was directly and heavily impacted.

Consequently, the government has taken a few measures to ensure that the insurance sector is more in-line with the current needs of the people. On top of that, most GCC countries will adapt insurtech as a part of their new strategic planning. What's more, technological advancements and innovations will be used to further better the insurance sector. Also, acquisitions and mergers will be as active as they have been since 2020. However, there may be more acquisitions and mergers now since small scale companies find it hard to compete with the high operating costs of the sector. Therefore, new policies are being formulated and implemented to help mid-size and small-size players get back in the game. Apart from that, tech-enabled insurance operators and insurance aggregators will also benefit from these new regulation policies.

Additionally, better life and non-life insurance plans are also expected to come out now. Forbye, insurance companies are working on designing products that are more in line with the customers' needs to avoid the debacles that happened during the first wave of the pandemic. Primarily, the goal is to target weakened profitability of the insurance sector altogether. In addition, re-conceptualising and revisions in the structure of existing products will also be conducted to inspire the creation of new products