UAE: Loss ratio expected to rise in 2H as claims experience normalises
Source: Middle East Insurance Review | Oct 2021
AM Best said that it is cautious on the outlook for full-year 2021 for the listed insurance market in the UAE.
One area to watch out for is the potential for increases in the loss ratio in 2H 2021 as claims experience normalises on competitively written business.
The AM Best’s report, ‘Profits and Capital Rebound for Listed Insurers in the United Arab Emirates’, noted that 1H 2021 was marked by a notable rebound in profit and overall capital levels.
The report stated that the UAE insurance market’s performance as a whole has been resilient to challenging macroeconomic conditions and intense competition.
Overall market premiums written reached AED15.1bn ($4.1bn) for 1H 2021, a growth of nearly 6%. Meanwhile, net profit was AED1.14bn, versus AED949m in 1H 2020. The growth in operating profits was despite an increase in the market-wide loss ratio and was indicative of stronger investment performance compared with 1H 2020.
Market conditions in the UAE remain difficult, particularly in core motor and medical lines, which represent a large part of insurers’ retained portfolios. Underwriting performance for 2020 was boosted by the COVID-19 fallout, such as reduced frequency of motor and medical claims. M