Prospects are bright for the
United Arab Emirates (UAE) insurance market, predicts The Dubai
Chamber of Commerce & Industry (DCCI), an organisation
dedicated to promoting business in the Gulf state.
The DCCI predicts that the
UAE’s insurance market will achieve an overall CAGR of 10.4%
between 2010 and 2014, with premium income rising from AED22.55m
($6m) in 2010 to AED33.5m.
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Dubai is one of the seven
emirates forming the UAE, a grouping with a total population of
almost 5m, of which some 3m are expatriates. The other UAE states
are Abu Dhabi, Ajman, Ras al-Khaimah, Sharjah and Umm al-Quwain.
Abu Dhabi has a population of some 1.7m, making it the most
populous. It is followed by Dubai with a population of about
1.3m.
Driving premium income
growth, believes the DCCI, will be rising income levels and an
increase in penetration from low levels. Specifically, the DCCI
predicts that income per capita will rise from $40,020 in 2010 to
$46,360 in 2014.
The lion’s share of premium
income in the UAE is currently earned by general insurers, and in
2010 stood at an estimated AED19.27m, 85% of the industry
total.
The DCCI predicts that
general insurance premium income will rise to AED19m in 2014, a
CAGR of 11%. This would increase general insurance penetration from
2.03% of GDP in 2010 to 2.2% in 2014.
Life insurance still plays a
minor role in the UAE with premium income in 2010 totalling only an
estimated AED3.283m. This is expected to rise to AED4.441m in 2014,
a CAGR of 8%. This would result in life insurance penetration
actually decreasing from an already minimal 0.35% of GDP in 2010 to
0.33% in 2014.
Despite promising growth numbers predicted by the DCCI,
the UAE clearly remains an under-insured market, especially in the
life insurance sector. The DCCI noted that demand for Islamic
takaful insurance products appears to have a high
potential for rapid growth in premium volumes.
