UAE: IA scrutinising loss-making insurers
Source: Middle East Insurance Review | Jan 2020
The UAE Insurance Authority (IA) has said it is closely monitoring all insurers operating in the country, especially those that have posted financial losses.
The IA stressed its keenness to ensure the safety of the insurance sector, and the sustainability of insurers, according to a report by Emirates Today.
Industry data showed that the sector’s results for the third quarter were positive overall, with the combined net profit of national companies amounting to AED1.4bn ($381.2m).
Among insurers with accumulated losses as at 30 September was Takaful Emarat which posted accumulated losses of about AED35.2m, representing 23.5% of paid-up capital of AED150m. For the nine months to September, the company posted losses attributable to shareholders of AED17.6m.
In a statement to the stock exchange, Takaful Emarat said the medical insurance portfolio recorded losses due to reduced margins over the period. Losses were higher than expected. Its 3Q2019 financial statements showed that net claims incurred reach AED187m, more than double the AED83.6m posted for the corresponding nine months of 2018.
The company has already taken remedial measures such as reducing its overheads and discretionary expenses. Other actions are in progress such as reviewing underwriting guidelines and loss making portfolios to price them appropriately. In the last two years, the company invested heavily in IT, digitising its sales and processes.
The goal of the IA is to strengthen the protection of investors and shareholders in the UAE’s financial markets.
The Authority added that it is also monitoring Emiratisation in the insurance sector. Companies that are not committed to achieving their mandated ratios are subject to fines approved by the Higher Committee for Human Resources Development, pointing out that the percentage of Emiratisation in the sector is currently 12%. M
AED1 = $0.27