UAE: Takaful firms expected to turn to motor for profitability
Source: Middle East Insurance Review | May 2017
Islamic insurers in the UAE are expected to turn to motor lines to boost profitability because of saturation in other classes of business, according to Badri Management Consultancy.
Mr Hatim Maskawala, Managing Director of the actuarial consulting firm, said: “The rates are quite low on the vehicle side; there is a possibility that they will grow over time over the next two or three years.”
His comments were made following a shake-up in motor insurance in the UAE this year that has resulted in greater levels of protection for vehicle owners but also rising premium rates, reported The National.
“The companies will raise the prices to make sure they don’t lose more money,” he said in his speech at the two-day World Takaful Conference in Dubai.
At the conference, delegates discussed the fortunes of an industry facing challenges that include too much competition as well as difficulty in selling takaful products that are harder to explain to customers than the conventional variety.
Both takaful operators and conventional insurers are going through tough times and analysts expect that a wave of consolidation is likely to reduce the number of insurers, which has grown in recent years.
The competitive market has made it difficult for some to stay afloat, especially those that made risky investments in the stock market in recent years and suffered heavy losses.
Analysts including those at the international professional services firm PwC are, however, upbeat about long-term growth. PwC has said the insurance market in the Middle East has significant growth potential, as the current average insurance penetration rate is 0.3% in life insurance and 1.1% in non-life insurance. M