Strong indicators have emerged in recent years showing that several companies operating in the insurance sector in the UAE are moving towards fair pricing, which enables them to provide a good quality services at good prices, says
Ebrahim Obaid Al Zaabi, Director-General of the UAE Insurance Authority.
Writing in Zawya, Mr Al Zaabi adds that there has also been a notable improvement in the insurance companies’ technical capabilities.
He says that within the past period, a number of new laws and regulations were issued by the Insurance Authority, aimed at preserving the rights of policyholders and ensuring a necessary margin of solvency for companies.
The laws have rectified some issues, including the gradual elimination of some pricing policies that had a negative impact on competition and the overall performance of the industry.
Recently, competition has intensified among insurance companies operating in the UAE. As a result of the increase in the number of companies in the sector, many companies operating in the UAE's insurance sector have undergone structural amendments and adjustments to their financial reserves in the past period following the intervention of the Insurance Authority.
The authority has issued legislation for insurance companies and takaful companies to regulate the amounts of reserves they hold so that they are ready to meet their future responsibilities, investments and financial policies.
Mr Al Zaabi, who is also a member of the executive committee of the International Association of Insurance Supervisors, says that the insurance market in the UAE is witnessing noticeable growth due to its diversity and openness to companies outside the domestic market, which helps it achieve good returns that help increase the flow of liquidity from insurance revenues to the local market.
The UAE’s insurance market is the largest in the Arab region in terms of the total size of its Gross Written Premiums (GWPs), subscriptions and the availability of different types of insurance. Written premiums stood at a total of AED40 billion (US$10.9 billion) in 2016, an increase of 8.3% from 2015. The amount of funds invested in the sector grew to AED52.2 billion in 2016, which was a 13.7% increase on the previous year. A Sigma publication provided by Swiss Re also ranked the insurance sector in the UAE first in terms of insurance premiums generated across the MENA region in 2016. The contribution of the insurance sector to overall GDP increased to 3.12% in 2016, up from 2.72% a year earlier.
The insurance sector is an umbrella and a mirror of the national economy. The more economic activity, the greater the need to expand the insurance sector and hence the more active and energetic the sector becomes, says Mr Al Zaabi.