The UAE insurance industry is projected to grow between 5% and 8% this year despite negative impact of the financial crisis on the industry.
Fareed Lutfi, Secretary General of Emirates Insurance Association (EIA) and President of Dubai Insurance Group, said that the UAE insurance sector would witness growth rate between 5% and 8% this year in spite of negative impact of the financial crisis on the sector, as reported by
Emirates Business.
The sector is expected to stabilize this year with the dampening of economic slowdown. Insurance premiums surged from Dh14.59 Billion in 2007 to Dh18.3 Billion last year (2008), resulting in overall industry growth of 25.42%. Property insurance premiums also posted growth of 31.1%, taking premium revenue from Dh11.9 Billion in 2007 to Dh15.6 billion in 2008.
Domestic insurers’ total premiums for property and liability insurance stood at Dh14.5 Billion last year. Claims ratio (excluding re-insurance share) for property and liability insurance declined in 2008 to 57.6% against 62.2% in its previous year (2007).
RNCOS., a leading market research firm, has also predicted positive growth for the UAE insurance industry in its research report “
UAE Insurance Market Forecast to 2012”. The firm states that economic diversification and high growth rate have been reflected in the insurance premiums generation for 2008 and this uptrend trend will continue in future since market dynamics are favorable to growth. Long-term prospects for the entire insurance industry, particularly life insurance segment, seem very bright as the number of expatriates has been consistently rising along with income level of natives who will invest in life insurance policies (with saving component).
Although the premiums soared last year, the insurance industry is not completely immune to the financial crisis because premium revenue from construction industry declined owing to the negative impact on construction activities in the country.
Market Pundits hold different opinion on the financial crisis as they believe that the industry should use this situation positively by relooking at the current business models and fixes existing loopholes. Government, regulator and the industry should work in coordination to devise new strategies that will help them to deal with such situation effectively in future.
According to a Research Analyst at
RNCOS, “The UAE insurance industry needs to adopt a new approach of bringing transformation in the existing system to make it more effective in dealing with future challenges. Since the market is stuffed with traditional insurance products, which are gradually their stronghold, the time has come when insurers release new products in the market to strengthen their position and increase insurance penetration in the country.”
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