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- Dubai 04:52 06:06 12:13 15:36 18:14 19:27
The UAE is the largest insurance market in the Gulf market, where increasing demand for automobile insurance, improved health awareness, and greater respect for natural calamities are expected to boost the premium pool to $20 billion (Dh73.42bn) within the next two to 10 years, a senior UAE minister said.
“However, the Gulf market also faces its own unique challenges, such as undercapitalisation, minimal penetration, and low public awareness on the benefits of insurance,” Sheikha Lubna Al Qassimi, UAE Minister of Foreign Trade, said at the World Insurance Forum at the Dubai International Financial Centre yesterday.
Sheikha Lubna said she expects the international insurance industry to achieve a compound annual growth rate of 5.4 per cent, with the general insurance segment alone posting $41.6bn in revenues by 2012. Globally, however, the challenges to the industry’s growth include demographic shifts; international conflicts; regulatory compliance; and climate change, she said. “These must be closely scrutinised, discussed and debated to formulate strategies that can effectively overcome them.”
In the Middle East, the insurance sector remains relatively untapped, with a premium turnover of $12bn a year. Premium per capita is $25, representing only one per cent of the GDP in the Arab world, she said.
“Our region’s markets are generally characterised by several small and often specialised insurers, and are still growing in terms of per capita spending on insurance and density. The Middle East is thus poised for significant expansion and offers vast opportunities for regional and global providers.
“Today, non-life insurance continues to dominate the region, with many markets featuring high levels of concentration on selected insurance retail lines, and major commercial insurance contracts covering higher-risk infrastructure projects such as oil, gas and construction.
However, there are various efforts to expand insurance products; DIFC, for example, is studying the development of Shariah-compliant Islamic insurance and re-insurance, known as takaful, which is attracting regional and international interest.”
Takaful insurance is expected to grow to $4bn in the medium term.
“Patronage of non-life product risk and diversification is expected to follow this trend as well. Overall, the Middle Eastern insurance industry is expected to grow at the compound rate of 18 to 20 per cent,” she said.
“The global insurance industry has often led the corporate world in acknowledging the impact of global issues and trends, such as the reality and consequences of climate change. I believe that this leadership and sensitivity will make the quest for innovative and effective solutions to the present crop of industry obstacles both swift and highly productive.
“The insurance community faces several challenges in the midst of global change. But it will certainly prevail through foresight, commitment, and unity.”
$12bn: Turnover premium in the Middle East
$4bn: Expected medium-term takaful growth
20%: The Middle East insurance growth
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