Team Blitz India
THE insurance sector in the UAE is poised to experience double-digit growth this year, buoyed by the expanding economy and a flourishing workforce.
The UAE has become a great destination for work and leisure. It is witnessing a rise in the middle class, upper-middle-class, and higher strata of the population, who are choosing to stay and work in the Emirates. If in the past decade there was a surge in low-wage workers, a shift towards entrepreneurs, professionals, and families is being seen.
This is resulting in a surge in the requirement for auto, travel, medical, and home insurance. The personal and commercial lines of business could grow at an annualised growth rate of at least 10 to 15 per cent for the next three to four years. A stable geopolitical situation could, in fact, allow at least a 15 per cent annualised growth rate for the sector.
This opportunity for growth will be utilised by players who move with the times and invest in technologies that provide convenience to customers. In the personal insurance space, people would want to do their transactions on mobile phones. Digitalisation and making insurance products available on digital will be the prime focus for insurers this year.
Since rents are already up 18 per cent, the human resource cost, too, has risen. So, insurance industry needs to achieve optimum utilization of resources to overcome costs that are beyond control. Technology can certainly help companies scale up operations and increase efficiency.
In the commercial lines of business, property insurance is expected to grow in double digits. As the UAE is looking at doubling the population over next decade, there will be a sizeable investment going into the infrastructure and construction projects. Liability insurance is expanding as diverse businesses with global risk exposure set their base in the UAE.
Besides, as people and organisations become more aware of their legal rights, the demand for this type of insurance will rise further. Medical insurance to become mandatory in the Northern Emirates, which will further propel demand for medical cover and 10-15 per cent growth in the medical portfolios of the companies.
The industry veteran also pointed to the rise in demand for cyber insurance. In today’s ecosystem, there is a growing necessity for cyber insurance by corporates as well as individuals due to the expanding nature of cyberthreats prevalent in each industry.
The insurance industry in the UAE is at an interesting crossroads where it is benefiting both from the rise in demand and tighter regulatory provisions. The UAE Central Bank, which is the insurance regulator, has taken a very stiff position on solvency requirements for insurance companies. This has a direct bearing on the company’s underwriting laws. Insurers are being challenged to underwrite more sensibly, which ultimately will allow insurance firms to become stronger.
