UAE: Bright profit outlook for insurance industry this year
Source: Middle East Insurance Review | Jun 2017
Insurers in the UAE are forecast to report an increase of 25-35% this year in profits to around AED1.5 billion (US$408.4 million).
Forecasts indicate that the size of the UAE insurance sector is likely to expand by between 10% and 15%, with total premiums written for all lines of insurance reaching AED48-50 billion this year, compared to about AED44 billion in 2016.
Experts pointed out that the insurance sector is preparing to launch a new phase this year, buoyed by last year’s performance and in line with national economic growth. This momentum could lead the industry to post AED70 billion in premiums in 2020, representing an annual growth of 10%, according to a report in Al Bayan.
The expectations of high growth rates of insurers were attributed to two government measures. Firstly, the Dubai government has implemented compulsory health insurance for all those with residence permits issued by Dubai, including family members. Secondly, the government amended motor insurance regulations that introduce a unified motor policy with upper and lower limits on premiums, with increased benefits for policyholders, that took effect on 1 January.
Mr Fareed Lutfi, Secretary General of the Emirates Insurance Association, said that many insurers had suffered years of losses and some were on the brink of insolvency until the intervention of the Insurance Authority. Measures taken by the regulator led to a turnaround in the performance of the insurance sector which saw profits of almost AED1.2 billion in 2016 compared to losses of about AED170 million in 2015.
He said that a profit growth of between 25% and 35% this year is not unlikely, with motor vehicles insured under the new regulatory rules. M
AED1 = US$0.27