By Yasmine Saleh
The United Arab Emirates (UAE), the Gulf’s biggest insurance market, plans to issue new regulations this year to foster growth in the sector, including rules covering bancassurance and dispute resolution, the head of the country’s insurance authority said.
The UAE insurance industry has been impacted by a slowdown in economic growth in the region following the drop in oil prices, as well as a string of fires in high rise buildings in the Gulf Arab state in the last three years. Read more here.
“We have a number of regulations and instructions that are to be issued in 2017. We are also keen on developing alternative dispute resolution methods,” he added.
In the UAE, Gross Written Premiums (GWPs) - the total value of premiums written by an insurer before commissions and other deductions – reached 40 billion dirhams ($10.89 billion) in 2016, according to the IA’s website, up from 37 billion dirhams in 2015 and 33.4 billion dirhams in 2014.
The executive said the new rules would also introduce regulations related to the bancassurance business, the process of selling insurance products through banks, but did not elaborate on specific details.
A report by the Middle East Insurance Review last May said the new bancassurance rules would include details on the procedures banks in the UAE will need to undertake to be licensed to market insurance products, as well as the specific products they will be allowed to offer.
Bancassurance is still in its early stages in the Gulf Arab region, with a market penetration rate of between 1 to 2 percent, compared to between 8 to 15 percent in other mature markets, according to a report by consultancy Alpen Capital issued in October 2015.
Alzaabi said new guidelines will also be issued this year to regulate the 35 firms in the country which offer actuarial services, the process of analysing and evaluating insurance policies and risks.
The authority announced last year that all insurance companies are required to appoint an actuary to evaluate pricing of properties, along with other insurance policies, according to the Middle East Insurance Review.
Motor insurance revs up
According to Alpen Capital’s report, motor insurance accounts for nearly 40 percent of the UAE’s total non-life insurance market and it is expected that higher premiums will fuel further growth.
“Growth of motor insurance, due to new motor pricing, is also likely to aid the segment’s growth, especially since the health insurance and motor insurance are the major insurance, business lines in the UAE,” Alzaabi said.
Motor insurance, like health insurance, is mandatory in the UAE and premiums have increased over the past two years. They are expected to increase further this year after new tariffs introduced last month saw fees rise by almost 100 percent, according to a report by Emarat Alyoum newspaper issued on January 18.
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