Greater adoption of medical insurance policies, a higher uptake of pension schemes, and increased penetration of individual savings plans will drive UAE insurance this year, according to financial advisor Nexus Group.
Bolstered by regulatory reform and increased community awareness, insurance is set to witness continuous growth in the country, with medical insurance taking the lead, said Mr Tarun Khanna, CEO of Nexus Group.
“As regulations are now firmly in place, healthcare will become more accessible to residents, enabling them to seek treatment when they need it most,” said Mr Khanna. “It is only natural that once insurance is mandated, uptake will increase as businesses are required to provide insurance for employees and their dependants.”
Compulsory medical insurance was rolled out by the Dubai Health Authority in 2014 and is expected to cover all Dubai residents by 30 June 2016, raising the number of individuals with medical insurance from 1.5 million to 4 million, according to Alpen Capital’s 2015 regional industry report.
Medical insurance is not the only segment that is expected to witness considerable growth in the UAE. As businesses begin to recognise the value of safeguarding their gratuity liabilities, more companies in the UAE and across the region will be taking on pension schemes, said Mr Khanna.
“During the last recession, many businesses learned the lesson the hard way when they were forced to shut down and did not have the cash flow they needed to pay off their employees’ end-of- service settlements,” he said. “Today, many companies understand that a small investment can go a long way. Gratuity funding, for example, can protect businesses in the event they are unable to fund their employees’ end-of-service benefits.”
Individual savings plans are also likely to see an increase amid challenging economic conditions spurred by low oil prices, said Mr Khanna.
“Such turbulent times often serve as a reality check for many residents and working professionals. As a result, we expect to see more people choose to spend less and save more in an effort to secure a sustainable financial future for themselves and their loved ones,” he said.
The UAE insurance industry recorded US$9.1 billion in GWP in 2014 – nearly 41% of the region’s total GWP that year, according to the Alpen Capital report. Between 2010 and 2014, the industry registered compound annual growth rate of 11%.
“It is an exciting time for both the insurance industry and policyholders in the UAE. Backed by government support, we expect not only to see a growth in business building opportunities, but also in the overall quality of coverage for our clients,” Mr Khanna said.