The UAE insurance sector demonstrated adequate solvency, sustained profitability, and growth across key performance indicators, ensuring the protection of policyholders, according to the Central Bank of the UAE (CBUAE) in its recently released "Financial Stability Report 2024".
The sector remained resilient in 2024, with total assets increasing to AED144.4bn ($39.3bn), up from AED130.3bn in 2023.
Other industry performance indicators highlighted in the report are:
The sector maintained an adequate solvency position, with a solvency capital ratio (SCR) of 232%. This improvement was driven by a modest increase in required capital compared to the growth in available own funds.
Gross written premiums (GWP) experienced substantial growth, expanding by 21.4% year on year to AED64.8bn. Property and liability insurance premiums grew by 27.9%, while health insurance premiums increased by 18.5%, and premiums from insurance of persons and fund accumulation rose by 11.9%. Health insurance accounted for 47.4% of total premiums; followed by property and liability insurance, 41.0%; and insurance of persons and fund accumulation, 11.6%.
Gross claims paid across all insurance types rose by 35.8%, reflecting increased payouts for insurance of persons and fund accumulation, property and liability, and health insurance. The sector played a vital role in economic recovery following unprecedented weather conditions in April 2024, with incurred claims allocated for related damages.
The insurance sector’s profitability was bolstered by sustained underwriting performance, where GWP growth outpaced claims payouts, improving the loss ratio. Technical provisions grew by 25.6% to AED95.7bn, enhancing capacity to meet policyholder obligations.
However, the investment portfolio contracted by 3.9% to AED74.2bn, representing 51.4% of total assets, with investments diversified across equity, bonds, real estate and deposits.
The retention ratio of written premiums improved to 54.3% in 2024, amounting to AED35.2bn, compared to 53.9% (AED28.8bn) in 2023. This upward trend indicates increased premiums retained within the UAE, signifying the sector’s stability and development, balanced with the use of appropriate risk transfer tools to specialized reinsurance institutions.
Regulation
The report said that the implementation of “Decretal Federal Law No. (48) of 2023 Concerning the Organisation of Insurance Operations” introduced stricter licensing and compliance requirements and enhanced consumer protections, thereby strengthening the regulatory framework for the sector. Additionally, the CBUAE introduced new regulations, including fitness and propriety standards for governance and updated rules for insurance brokers, covering licensing, reporting and supervisory requirements.