While there could be some rate increases for motor policies in the second part of the year and for certain reinsurance lines, GWP growth in the UAE insurance market will likely remain relatively flat in 2021, due to economic uncertainty and a decline in the expat population in Dubai and other emirates in 2020-2021, says S&P Global Ratings in a new report.
Mr Emir Mujkic, director - lead analyst, Insurance Ratings at S&P says in the report “GCC Insurers In 2021 - Robust Capital Supports Credit Quality” that the forecast is of a modest decline in net earnings in 2021 as claims return to normal and investment returns remain subdued. “Overall, we anticipate the combined (loss and expense) ratio weakening to about 92% in 2021 from about 90% in 2020,” he said.
Amid weaker economic conditions, GWP growth has been relatively flat. Mr Mujkic said, “We estimate an overall GWP decline of almost 2% in 2020, particularly due to lower premium income from motor and life/savings business..
“Insurers' operating performance strengthened in 2020, thanks to fewer motor and medical claims.”
Mr Mujkic says that regulatory oversight will likely strengthen, thanks to the merger of the Insurance Authority and the Central Bank, which could lead to stricter enforcement of regulations, increasing pressure on smaller and weaker insurers.