UAE: Non-life companies unlikely to expand through organic growth
Source: Middle East Insurance Review | Mar 2019
Growth in general insurance in the UAE is unlikely to be organic, despite the upsurge in medical insurance proliferation in Dubai in recent years resulting from the introduction of the mandatory health insurance scheme, according to Mr Issam Kassabieh, senior financial analyst in the research department at MENACORP which is a multi-line financial services group.
“I believe the growth of the insurance sector is not going to be organic whatsoever. It’s going to happen through M&A. No one has the time nor the human resources to go and grow their profile organically. Thin margins do not give you that much time,” he told Zawya.
He cited as an example Takaful Emarat’s acquisition of Al Hilal Takaful that was completed last year. The merger leads to the creation of the largest Islamic insurer in the UAE. “This is the way to go,” Mr Kassabieh said.
Separately, he noticed a key change in the strategies of insurers in the UAE. He said, “I believe that certain insurance companies right now are trying to strengthen their cash position, even if it means less sales and fewer policies.”
He noted that the insurers want to accept policies that are not risky, which guarantees that there will be no claims, and that the amount of money gained will be transferred to net profit. “So, they want high-margin policies instead of policies that are shrunken down with reinsurance,” he said. M