UAE Insurance Market Report
U.A.E. has the highest premium per capita ($597.20) in the Arab world according to the Digest Arab Insurance Rating 2005.
UAE's insurance industry is heading for a period of more vibrant growth in the backdrop of a federal government decision to allow foreign companies to enter the fray.
Industry analysts predict that the sector, which is set to poise a 20% cent growth in 2004 and will sustain the trend in 2005 given the overall economic buoyancy of the country.
Analysts say that while the move to open up the sector will make the market more crowded, it will throw a bigger challenge to the current players, prompting them to be more aggressive and innovative with their marketing strategies and products.
At present, the sector boasting more than 50 companies, of which 16 listed on the stock market, contributes around one per cent to the country's GDP. However, according to Global Investment House, the sector, posting a gross premium close to $900 million, is the second largest among AGCC countries, behind Saudi Arabia at $941 million. In terms of per capita spending on insurance, the Emirates ranks top in the AGCC.
"Insurance is considered as a sector with lot of potential in the Middle East, thanks to the current low penetration levels, high growth in population and supportive economies. This holds true for the UAE too, especially as it is one with a relatively higher per capita income. However, it would be difficult for the domestic companies to repeat their performance in the past years, as the Ministry of Economy and Commerce has already submitted recommendations to allow new foreign insurance companies to operate in the UAE. Considering the fragmented nature of the domestic industry, it would be difficult for the players to withstand foreign competition. This could possibly lead to consolidation in the medium term," the report said.
The Abu Dhabi Financial Services, in its recent report observed that national insurance companies in the UAE must sharpen competitiveness to ensure higher revenues and risk reduction to entrench themselves for the increased competition from foreign players. The report urged national insurance companies to develop new strategies to retain their market share and focus strongly on the core insurance business, relying less on investment income.
The Dubai Chamber of Commerce and Industry (DCCI), said in a report that Abu Dhabi, Dubai and Sharjah, host 91 per cent of the operating insurance companies. In terms of ownership of companies, 56 per cent of them are nationally owned, 6.7 per cent are Arab owned, 16.2 per cent are foreign owned, and the rest are joint ventures between nationals and foreign companies or Arab companies.
The report by the Global Investment House notes that UAE's life insurance segment, accounting for 26 per cent of the total premiums in '03, is the highest among the AGCC countries, with Kuwait close behind at 25 per cent share for life. Within the general insurance segment, motor and miscellaneous accidents are the dominant segments in the UAE.
Listed UAE Insurance Companies
This is a list of Insurance Companies in the UAE that are publicly traded:
Al-Ain Ahlia Insurance Company
Abu Dhabi Insurance Company
Al Khaznah Insurance Company
Dubai Islamic Insurance & Reinsurance (AMAN)
Al Wathba National Insurance Company
Al Dhafra Insurance Company
Dubai Insurance Co.
Dubai National Insurance Co.
Emirates Insurance Company
National General Insurance
OMAN INSURANCE COMPANY
United Insurance Company
Union Insurance Co
Foreign Investment In Qatar Insurance Market
The move to open up the sector to foreign players also allows licensed companies to open new branches. The decision specifies the bases and criteria for granting new licences including the introduction of new areas of coverage that are not provided by the existing companies. As per the decision, new companies are bound to employ no less than 10 per cent nationals in the first year of operation in the UAE. The percentage, however, will rise to 15 per cent in the second year, 20 per cent in the third year and 25 per cent in the fourth year.
A top official with the Ministry of Economy and Commerce for Companies said the decision was adopted to allow free competition in the insurance sector. It was also aimed at bringing in foreign insurance companies with strong financial background and high technical insurance expertise for developing and boosting the efficiency of the UAE insurance market.