(ASHRAF AL AMRA)
The premium income of insurance companies in the UAE increased to $3.5 billion (Dh12.8bn) in 2007 compared to $2.8bn the previous year, a 35 per cent surge.
The UAE accounts for 40 per cent of total GCC income, said Samir Abdulahad, deputy general manager of Abu Dhabi National Insurance Company. “UAE insurance companies accounted for 42 per cent of the total GCC premium income in 2007,” said Abdulahad.
Real estate projects worth $1.7 trillion are under construction or planned in the GCC and this creates massive opportunities for the insurance and reinsurance market in the region. “The regional insurance and reinsurance market has high growth opportunities due to increasing gross domestic product (GDP), expanding energy and construction projects and the sustained economic growth expected over the next decade,” he said.
Abdulahad was speaking at a briefing on the World Insurance Forum (WIF) that will take place next week in Dubai – the first time it is being staged outside Bermuda. “The WIF in Dubai comes at a critical stage as crucial changes are taking place in the regional insurance and reinsurance market, not only in increasing opportunities but also in the type of clients,” he said.
“We see massive projects taking place, especially the Dubai World Central development at Jebel Ali, and all these developments will create an increasing need for insurance and reinsurance instruments.”
Marc Slatter, managing director of brokers and consultants Al Futtaim Willis, said the insurance and reinsurance market in the GCC region was facing fundamental changes.
“We see changes in the nature of industry development and changes in market trends,” he added. “Previously the insurance market was booming in the West, in Europe, and in the East, in Singapore, while the region between Europe and Singapore was inactive.
“The current change is taking place here, in Dubai, and many international players will come to benefit from emerging opportunities.
“The market needs more players and potential clients need well-established products so we can combine regional needs with international companies, and this will help the industry to grow in the region.”
WIF Manager Suzei Pewter said the forum was being held in Dubai because the emirate was becoming the financial centre for the Middle East and Asia, and offered great potential to the insurance and reinsurance market.
“Industry leaders will exchange views and discuss best practices. Major insurers from all continents and representatives of the leading 35 companies will be attending as both speakers and delegates.”
The insurance forum will discuss the three main challenges facing the insurance and reinsurance industry – globalisation climate change and terrorism.
Lord Patten, the last British governor of Hong Kong, is expected to speak on the advantages and risks of globalisation and the need to understand the impact of terrorism on the world economy and its effect on the expanding insurance and reinsurance market.
ISLAMIC INSURANCE SECTOR
Dubai International Financial Centre (DIFC) expects the number of insurance companies listed with the bourse to reach around 40 by the end of this year compared to 22 now, a senior official said on Tuesday.
George Oommen (pictured above, right), executive director of insurance at the DIFC, said: “The DIFC is also looking to develop the Islamic insurance and reinsurance sector, known as Takaful and Re-Takaful, which is becoming appealing both regionally and internationally. As the Shariah-compliant alternative to conventional insurance, the market for Takaful is making progress and looks set to continue this growth as more Islamic finance instruments become available.”
Oommen said: “The DIFC aims to increase the contribution of financial services to Dubai’s GDP from $3.4 billion (Dh12.5bn) today to $15bn by 2015. “To realise our ambitions we recognise the importance of developing a range of products and services available at the centre. And as an industry that has been identified as a crucial component of the future expansion of the centre, insurance and reinsurance in the region – including the captives sector – looks set to undergo a period of rapid growth,” he said.
A captive insurance company covers risk only for its parent company. Oommen said one of the key factors that had attracted captives to the region was the Dubai Financial Services Authority’s introduction of specific legislation relating to the sector.
“This legislation, which is based on English Common Law, has created a solid basis for the industry and has attracted a lot of business to the region.”
Insurance firms’ income from premiums hit $3.5bn last year