A four-pronged disruption – increasing customer expectations, regulatory changes, technological advancements and economic pressures – is expected to impact MENA insurance markets. And how individual insurers respond to these emerging challenges will define the future leaders of the business, said Mr Sanjay Jain, MENA Insurance Leader in EY’s latest report “Insurance Opportunities in the Middle East”.
The report also identified seven trends expected to drive MENA insurance markets in the near future: Value Added Tax (VAT), IFRS, Robotics, Analytics, Digital, Technology, and Cyber.
In addition, the report highlighted the performance of the region’s two largest markets – the UAE and Saudi Arabia – both of which hit the US$10-billion GWP mark, despite economic headwinds and lower oil prices.
The UAE and Saudi Arabia secured 10th and 11th rankings respectively from 22 countries assessed in terms of opportunity for “significant premium growth” and 6th and 7th places respectively in terms of “least amount of risk”, said Mr Shaun Crawford, Global Insurance Leader, citing EY’s “Emerging Markets Matter” report.
While UAE’s premium growth of 19% in 2016 was supported by the roll-out of Dubai’s mandatory health scheme, growth in other MENA insurance markets has been subdued, with profitability remaining a key concern.
While cost-cutting measures may bring short-term relief, sustained results can only be achieved by a well-executed operational transformation strategy, backed by robust technology and a customer-centric approach.
Customer centricity is expected to drive innovation in the MENA insurance markets, and insurers need to explore opportunities to deploy technology and automation.
Another priority is to embed analytical tools for precise decision-making, not only on the front end with customer analytics but also to support profitability, through claims and fraud analytics.
“Having witnessed the trends from a number of emerging markets over the recent years, we see Middle East markets going through a similar maturity curve, in terms of improving insurance penetration and maturing regulations, which augurs very well for the industry in the long term,” said Mr Rohan Sachdev, EY Global Insurance Emerging Markets Leader.
There are also clear signs of industry consolidation, evident by a number of Saudi insurers making merger announcements impelled by the current competitive environment and increased regulatory requirements. M