Report on The Insurance Sector Business In the United Arab Emirates for 2005
Introduction:
Ministry of Economy and Planning is pleased to present the annual report of the Insurance Sector Business in the United Arab Emirates for 2005, where in the in indications reflect the development achieved by the Insurance Sector in the United Arab Emirates.
This report asserts the significance of this sector and its substantial role in the national economy due to the huge funds invested there in, which amounted to Dhs. (18273) in 2005 while the value of underwriting premiums at the insurance market amounted to Dhs (7385) M.
It worth noting that notwithstanding the efforts exerted by the Supreme Insurance Committee and National Human Resource Development Committee in the Insurance Sector in U.A.E. by implementing number of training programs in the field of insurance so as to provide a qualified cadre to work in this sector, as well as urging the insurance companies to achieve the targeted emiratization percentage of (15%) of the total number of their employees, but the emiratization percentage is still low accounting only to (6.2%) of the total number of employees in the insurance companies.
This report aims at identifying various aspects of the insurance market in the United Arab Emirates and achieve the goal for which it has been filed i.e. to highlight the most important achievements of the Insurance Sector in the United Arab Emirates.
First: General Frame of the Insurance Sector in the United Arab Emirates:
1. Legal Frame Organizing Insurance Industry:
The Insurance Sector in the United Arab Emirates is organized by the Federal Law No. (9) of 1984 concerning insurance companies and agents, which was enforced as of 1/7/1984 following the issue of the Ministry of Economy and Commerce Resolution No. (32) of 1984 and Executive Regulation thereof.
The Ministerial Resolutions organizing insurance related professions in 1985 such as survey and damage assessment experts, insurance consultants, insurance arithmetic experts and insurance brokers, where also issued.
The Ministerial Resolution No. (54) of 1987 concerning unification of motor insurance policies and resolutions amending thereto was issued and put in force on 1/1/1988 through the form of the third party liability insurance policy and another policy for loss, damage and third party liability.
2. Organizational Structure of the Insurance Market n the U.A.E.:
2-1 Ministry of Economy:
The Federal Law No. (9) of 1984 concerning insurance companies entrusted the Ministry of Economy and Planning with the enforcement of provisions therein and to undertake its role in the supervision and control of insurance companies and agents and other insurance related professions.
2-2 Insurance Supreme Committee:
concerned with drawing up the general policy of insurance in the U.A.E. and to propose the regulations related to the general rules of control over the companies governed by the above-mentioned federal law. Its membership consists of representatives from competent authorities in the U.A.E. and U.A.E. Union of Chambers of Commerce and Industry.
2-3 U.A.E. Insurance Association:
It was announced by the Resolution No. (62) of 1988 dated 27/9/1988 and its membership consists of all the insurance companies operating within the U.A.E.
3. General Frame of Insurance Companies and Agents and Insurance Related Professions:
The number entered in the Special Register until the end of 2003 was as follows:
Insurance Companies:
(47) Insurance Companies, out of which (23) national insurance companies incorporated in the U.A.E., (24) foreign insurance companies incorporated abroad.
The number of companies carrying out all insurance activities (Life Insurance, Savings, Money Making and General Insurances) are (9) national companies and (2) foreign companies. The number of companies carrying out general insurance activities only are (14) national companies and (18) foreign companies, while the number of insurance companies carrying out Life, Saving, Money Making insurances) is only (4) foreign companies.
Insurance Agents:
There are (17) U.A.E. Insurance Agents.
Insurance Brokers:
There are (191) Insurance Brokers in the U.A.E. out of whom there are (166) national brokers and (9) foreign brokers.
Insurance Consultant:
(17) Insurance Consultants operating in the U.A.E.
Survey and Damage Assessment Experts:
(61) Experts operating in the U.A.E.
Insurance Companies Account Auditors:
(79) Insurance Companies Account Auditors.
Actuary:
(8) actuaries
Second: Economic Climate and its Reflection 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 though diversification of national income sources. The development of economic, constructional and social activities in the state has positively reflected on the Insurance Sector.
The premiums within the branch of general insurance increased from Dhs.(4740) M in 2004 to Dhs.(6181) M in 2005 accounting for as increase rate of 30%.
The rationalization policy adopted by the insurance companies operating in the U.A.E. had a positive impact on the reduction of the total average of claims during 2005 as the average has dropped from 53.5% during 2004 to 62.9% during 2005.
Third : Volume of Insurance Market Business in the U.A.E. and Insurance Benchmarks in 2005:
The total of the underwriting premiums for Life ,Savings, Money Making Insurances amounted to Dhs (1203) M. The share of the national companies in these premiums accounted for 24.3% while the foreign companies share accounted to 75.7%.
The total of the underwriting premiums in general insurance was as follows: Dhs (6181) M share of national companies in these premiums accounted for 74.5% while the foreign companies share accounted for 25.5%.
The rate of each of the general insurance branches was as follows:
61.8% i n accidents and liability branch.
16.9% in fire branch.
16.7% in land, sea and air transport branch.
4.6% in other risks branch.
7.6% in medical insurance branch.
The percentage of national insurance companies maintenance of underwriting premiums in general insurance branch was 45.1% while the maintenance percentage for each branch was as follows:
60.6% in accidents and liability branch.
26.8% in fire branch.
18.5%in land, sea and air transport branch.
4.9%in other risks branch.
52.6% in medical insurance branch.
Underwriting premiums for other general insurance: Dhs (6029) M.
Excess compensations (net) in general insurance branch before the deduction of re-insurance share accounted to Dhs. (3895) M.
The amount of compensations for general insurance branch before the deduction of re-insurance share accounted for 62.9% in 2005 against 53.5% in 2004.
The average compensations in each branch were as follows:
61.3% in accidents and liability branch.
108.9 %in fire branch.
43.5% in land, sea and air transport branch.
2.6% in other risks branch.
The total technical reserves for life, saving, money making and general insurance amounted to Dhs. (5300) M.
The total shareholders equity in the national insurance companies amounted Dhs. (13210) M.
The total invested funds amounted to Dhs (18273) M, 65.6% of this amount was in the form of shares and bonds followed by 26.6% as deposits.
Fourth : Number of Insurance Companies Employees:
The number of employees in the insurance companies operating within the U.A.E. during 2005 reached as far as (4130) out of which there are only (257) U.A.E. nationals at the rate of 6.2%.
Gulf News 2006
