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The UAE’s life insurance segment has the highest penetration rate in the GCC region, though it remains under penetrated when compared to more developed economies. What are the steps being taken by Insurance Authority to increase awareness as well as insurance penetration?
It is unfair to make comparison between developed insurance markets where centuries of experience behind them and newly emerging insurance markets where decades of experience are behind them. The IA of UAE is taking several measures to increase insurance awareness. The most important of which is the Regulation of Takaful Operations. This step was necessary to avail another alternative to certain sector of our society who would like to deal according to Islamic insurance conception only. Moreover, specialized conferences will be organized with the different economic sectors (industrials, traders, professionals …) in order to explain the role of insurance in the protection of their activities.
The volume of written premiums across all insurance segments in the UAE increased to AED 33.5 billion in 2014, up 13.5% compared to 2013. How do you assess the performance of different segments, namely, life insurance, motor insurance, health insurance, marine insurance, fire insurance, accident insurance, among others? Which one is the fastest growing?
Health insurance is obviously the fastest growing class of insurance for well-known reasons. Life assurance witnesses a satisfactory rate of growth. Medical malpractice is expanding. ‘Contracting all risks’ and ‘erection all risks’ are making good performance.
The Cabinet on Aug 30 this year issued a resolution granting the insurance companies in the UAE in the combined business of insurance of persons and fund accumulation operations along property and liability insurance a period of one year to regularize their positions. How this step will help develop the insurance sector in the UAE?
Article (25) of the federal law No. (6) Of 2007 is prohibiting the cumulating of life and non-life operations in one insurance company. 8 years elapsed and one more year has been granted for insurance companies to regularize their position. This step will be a factor of development by transacting life assurance by specialized companies and a factor of security by not cumulating both classes.
Several rules and regulations have been issued by the Insurance Authority to govern and streamline operations of the insurance agents. Do you believe this is an area that still needs further directives?
In UAE insurance market, we have insurance agents, insurance Brokers and insurance producers. Insurance agents profession is already regulated (Regulations No. (8) Of 2011) Insurance Brokers professions has also been regulated (Regulations No. (15) Of 2013). The IA has prepared a new regulation for insurance producers.
All theses professions are considered a major sector of the insurance market. Their activities should be well regulated and thoroughly supervised.
Foreign insurers have a lion’s share (81.4%) of the total underwritten premiums of life assurance AED 8.6 billion last year, compared to the national companies’ share of a meager 18.6%. What are the reasons for that? Is it because they have higher technical know-how, greater distribution capabilities, are more customer oriented and are financially better equipped?
This phenomenon is well understood in the Arabian Gulf area due to the demographic structure. Millions of expatriates are normally insuring their life with their National Insurance Companies through their branches in UAE.
UAE nationals are starting to realize the benefits of being insured and therefore we notice more and more nationals are obtaining life insurance policies. They have the two alternatives: The traditional insurance and the Takaful Insurance. Therefore, it is not a matter of financial position or Technical capabilities of local or foreign insurers.