Stay, save and spend: New UAE visas for retirees could benefit insurance sector

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The introduction of new visa rules for retirees in the United Arab Emirates (UAE) could boost the life insurance sector in the country, a Dubai-based analyst said.

Earlier this month, the UAE government approved a law that will allow expats to stay in the emirates after they retire provided that they own a 2 million dirhams ($545,492) property, or have at least one million dirhams in savings, or an active income of at least 20,000 dirhams per month. The law is due to be implemented in 2019, but it is not yet clear when.

Speaking to Zawya in a phone interview on Monday, Issam Kassabieh, senior financial analyst at Dubai-based financial services company Menacorp, said the new regulations could have a positive impact on the life insurance segment.

Kassabieh said the new arrangement could encourage insurance companies to come up with “life insurance products that will be like investment packages, with returns in exchange of monthly premiums”.

“The non-life insurance penetration is high, while the life insurance penetration is low,” Kassabieh said, speaking about the overall market both in the UAE and across the Gulf Cooperation Council (GCC) region. “There is plenty of opportunities for the insurance companies in the region,” he added.

According to a report by consultancy firm Alpen Capital which was released in December last year, the UAE has the highest life and non-life insurance penetration in the GCC region, which stood at 0.7 percent and 2.2 percent in 2016.

However, rates remain lower than the global average of 3.5 percent and 2.8 percent, respectively, according to Alpen Capital.

Three insurance companies contacted by Zawya were not immediately available to comment.

The introduction of the new visa regulations on September 16 is one of a number of recent moves made by the government to encourage more expats - who make up a majority of the population - to stay longer in the country. Plans have already been announced for 10-year visas to be issued to certain individuals such as doctors, engineers, entrepreneurs and innovators. A temporary, six-month visa for jobseekers has also been announced to help more UAE residents find work while remaining in the country, without having to leave once their job-linked visa expires.

The measures are aimed at boosting an economy that witnessed a slowdown in growth following a sharp drop in oil prices that began in 2014.

This month, the UAE’s central bank cut its forecast for 2018’s economic growth to 2.3 percent, instead of 2.7 percent which it had projected three months ago, according to Reuters.

The insurance sector, like many other industries, had also suffered a slowdown as a result of the economic downturn.