Insurance premiums at Dh29.5bn in UAE

Written premiums of all types of insurance amounted AED 29.5 billion, an increase by 12.2 per cent as compared to that of the year 2012), Sultan bin Saeed Al Mansouri, Minister of Economy, and Chairman of the Board of Directors of Insurance Authority, has said.

''This fact ascertains standing of this important sector and the vital roles it plays in the national economy due to the huge amount invested therein which amounted during the year 2013 AED 37.8 billion out of which 57.4 per cent investments in shares and bonds and 26.5 per cent investments in deposits,'' the
minister said in the forward of the Authority's annual report on the U.A.E. insurance sector for 2013.

On the other hand, he added, the total equities of the national insurance companies amounted to AED 17.5 billion

''No doubt that the establishment of an independent authority to organize and supervise U.A.E. insurance sector by virtue of the Federal Law No.6 of 2007
reflects the importance accorded by the State to this sector and its role in protecting the activities related to the economic, commercial, industrial and architectural sectors and providing health protection to all segments of the society.

He stressed that this care has put up additional responsibility on the Insurance Authority’s officials to exert maximum effort to complete the legislation organizing the sector, avail a technically qualified cadres and pay heed to ongoing training to keep up with the development and to ensure implementation of the best international standards to organize the market.

''The insurance Authority is still in the process of completing the organizing legislations. However, several rules and directives have been issued to organize operations of the insurance agents and professions associated with insurance.''

 Further, he went on to say the Insurance Authority completed preparation of all the financial regulations been prepared by an international expertise house. However, opinions of the insurance companies and the actuaries have been taken into consideration by circulating these regulations among them and amending same by inserting the suitable recommendations given as so and in the ad-hoc workshops as well.

These regulations when issued will play positive role in stability of the insurance market. The insurance Authority, as well, prepared regulations on marketing insurance policies through banks and since this practice is already in existence in U.A.E. insurance market, guiding rules have been prepared to organize the insurance companies’ transactions with banks in the field of marketing insurance policies for implementation pending issuance of the regulations.

Following is the full report:


Introduction:
Insurance Authority is pleased to present the annual report on the Insurance Sector in the United Arab Emirates for 2013, wherein the indications reflect the development achieved by the Insurance Sector in the U.A.E.

This report asserts the significance of this sector and its substantial role in the national economy due to the considerable funds invested therein, which amounted
to AED 37.8) bn in 2013 while the underwritten premiums amounted to AED 29.5 bn.


This report aims at identifying the various aspects of the insurance market in the United Arab Emirates and achieving the goal for which it has been prepared i.e. to highlight the most important achievements of the Insurance Sector in the U.A.E.




First: General Frame of the Insurance Sector in the U.A.E.:
1.    Legal Frame Organizing Insurance Industry:

The Insurance Sector in the U.A.E. is organized by the Federal Law No. (6) of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations which came into effect as on August 28th, 2007 and the Board of Directors Resolution No.2 of 2009 on issuance of the executive regulations of
Federal law No. (9) of 1984 of the said Federal Law and the issued and will be
issued rules, regulations and resolutions according to the provisions of the Law.


2.    Organizational Structure of U.A.E. Insurance Market:
2-1    Insurance Authority:
The Federal Law No (6) of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations entrusted the Insurance Authority with the enforcement of the provisions therein and to undertake its role in supervision and control of insurance companies and other insurance related professions so as to provide a suitable environment for the development of the insurance sector, and to enhance its role in the security of individuals, properties and liabilities against risks, and to protect the national economy, build up, develop and invest in the national savings to support the economic development of the State and to provide better services in suitable prices and cover in a competitive environment, and to emirtize jobs in the insurance sector.




2-2    U.A.E. Insurance Association:
Established by the Resolution No (62) of 1988 dated 27/9/1988 and its membership encompasses all insurance companies operating in the U.A.E.
3.    General Information on Insurance Companies and Agents and Insurance Related Professions:
The number of entities recorded in the Special Register until the end of 2013 as follows:
     Insurance Companies:
There are 60 insurance companies; (34 national insurance companies and 26 foreign insurance companies). The number of companies carrying out all insurance activities (life assurance and operations of fund formation and property and liability insurance) are (11) national companies and (2) foreign companies. The number of companies carrying out property and liability insurance only are (20) national companies and (17) foreign companies. The number of insurance companies carrying out life assurance and operations of fund formation only are (2) national companies and (8) foreign companies, while the number of companies carrying credit export insurance is only one national company.  It is worth mentioning that out of above said companies 10 national companies are carrying out takaful insurance.


     Insurance Agents:
(18) Insurance Agents.
     Insurance Brokers:
(168) Insurance Brokers; (161 national brokers and 7 foreign brokers).
     Insurance Consultants:
(19) Insurance Consultants

     Loss Adjusters:
(72) loss adjusters
     Actuaries:
          (36) Actuaries.

Second: Economic Climate and its implication on Insurance Business in the U.A.E.:
The State economy is remarkably stable as a result of the prudent policy adopted by the State through diversification of national income sources. The development of economic, constructional and social activities in the State has its positive impact on the Insurance Sector. The earned premiums of property and liability insurance increased from AED 20.3 bn in 2012 to AED 22.5bn in 2013 (an increase of 10.8 per cent) .






Third : Volume of U.A.E Insurance Market and Insurance Benchmarks in 2013:
     Total underwritten premiums of life assurance and operations of fund formation amounted to AED 7 bn. The share of the national companies amounted 21.8 per cent while that of the foreign companies 78.2 per cent.
     Total underwritten premiums of property and liability insurance as follows:
AED 22.5 bn-. The share of the national companies 74.4 per cent while that of the foreign companies 25.6 per cent.
Percentage of each of the above mentioned types of insurance as follows:
     32.8 per cent accidents and liability insurance
     9.7 per cent fire insurance.
     7.6 per cent land, sea and air transport insurance
     44.1 per cent medical insurance.
     5.8 per cent other risks insurance.
     Percentage of the national insurance companies’ retention of underwritten premiums of property and liability insurance 55 per cent while the retention  percentage for each branch as follows:
     65.2 per cent accidents and liability insurance.
     25.9 per cent fire insurance.
     27.4 per cent land, sea and air transport insurance.
     63 per cent medical insurance.
     19.2 per centin other risks insurance.
     Earned premiums of property and liability insurance: AED 21.5 bn-.
     Incurred losses of property and liability insurance before deduction of the re-insurance share AED 14.5 bn-.
     Loss ratio of property and liability insurance before deduction of the re-insurance share 67.2 per cent in 2013 against 68.1 per cent in 2012. The loss ratio  of each type of the insurance as follows:
     63.4 per cent accidents and liability insurance.
     41.3 per cent fire insurance.
     29.7 per cent land, sea and air transport insurance.
     85.1 per cent medical insurance.
     70 per cent other risks insurance.
     Total of the technical provisions of  life assurance and operations of fund formation AED 12.9 bn and properties and liabilities insurance AED 9.3 bn.
     Total of shareholders' equity of the national insurance companies AED 17.5 bn.
     Total of the invested funds AED 37.8 bn- 57.4 per cent of this amount in the form of shares and bonds 26.5 per cent bank deposits).

Fourth : Number of the Insurance Companies Employees:

The number of the employees of the insurance companies operating in the U.A.E. during 2013 reached (8,590) out of which there are only (769) U.A.E. nationals at a rate of 8.9 per cent.
 

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