Greater adoption of medical insurance policies, higher uptake of pension schemes, and increased penetration of individual savings plans will lead UAE insurance trends in 2016, according to financial advisor, Nexus Group.
Bolstered by regulatory reform and increased community awareness, insurance is set to witness continuous growth in the country, with medical insurance taking the lead.
“As regulations are now firmly in place, healthcare will become more accessible to residents, enabling them to seek treatment when they need it most,” says Tarun Khanna, the company’s CEO.
“It is only natural that once insurance is mandated, uptake will increase as businesses are required to provide insurance for employees and their dependants.”
Compulsory medical insurance was rolled out by the Dubai Health Authority in 2014 and is expected to provide coverage for all Dubai residents by 2016, taking the number of covered individuals in the medical insurance market from 1.5 million to 4 million, according to Alpen Capital’s 2015 regional industry report.
However, medical insurance is not the only segment that is expected to witness considerable growth in the UAE. As businesses begin to recognize the value of safeguarding their gratuity liabilities, more companies in the UAE and across the region will be taking on pension schemes.
“During the last recession many businesses learned the lesson the hard way when they were forced to shut down and did not have the cash flow they needed to pay off their employees’ end of service settlements,” Khanna said.
“Today, many companies understand that a small investment can go a long way. Gratuity funding, for example, can protect businesses in the event they are unable to fund their employees’ end-of-service benefits.”
Individual savings plans are also likely to see an increase amid challenging economic conditions spurred by low oil prices. Earlier this year, the International Monetary Fund urged Arab Gulf governments to cut spending and diversify revenues in response to lower oil prices – a move that could affect projects, wages, and employment.
“Such turbulent times often serve as a reality check for many residents and working professionals. As a result, we expect to see more people choose to spend less and save more in an effort to secure a sustainable financial future for themselves and their loved ones.”