Gross insurance premiums (GPW) of publically listed insurers in the UAE rose by 17 percent in the first half of 2017, according to a report.
The study by S&P Global Ratings found that as of June 2017, GPW for 28 out of the country’s 30 listed insurance companies had risen to a total of AED12.2 billion ($3.3 billion) from AED10.5 billion ($2.8 billion) in the first six months of 2016.
The growth in premium income was mainly driven by two regulatory initiatives, S&P noted. The first was the UAE’s introduction of a new unified motor policy in January, which provides fresh benefits such as increased insurance cover for third party liability claims (of up to AED2 million compared to AED250,000 previously).
S&P said it estimated that the new policy led to a 15 percent increase in premium volume from this line of business.
“Given that the revenue income from motor insurance contributes to about 25-30 percent of premium income in the UAE market, this change has been a key reason for the increase in premium volume,” the report said, adding that this growth is expected to moderate in the second half of this year.
The second factor was implementation of the final stage of compulsory medical insurance in Dubai, which has increased the number of policyholders under the scheme, S&P said.
Improved performance of the takaful (sharia-compliant insurance) sector also contributed to the significant improvement in the sector’s overall net income by June 30 2017, S&P said.
S&P Global Ratings credit analyst Emir Mujkic said: “The significant increase in underwriting profitably, particularly in the takaful sector, has had a positive impact on the market’s total net profits.
“The focus on better net underwriting results comes at a time when investment returns continue to decline. That said, despite lower investment results, we note that investment returns still play an important part in the overall earnings composition of listed insurers in the UAE.”
Gross premium growth and net profits for the full-year 2017 are likely to be slightly better than in 2016, the report added.
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