UAE General Insurance Market Poised for 13.2% Growth Due to Regulatory Shifts

A recent report by GlobalData has shed light on a significant upswing in the United Arab Emirates (UAE) general insurance sector. Anticipated to expand by 13.2% in 2023, this growth is attributed to transformative alterations in regulatory frameworks and the concurrent rise in insurance premium rates. The insights underscore the changing landscape of the UAE's insurance industry.

Health Insurance Emerges as Prime Driver of Expansion

GlobalData's comprehensive insurance database has revealed a compelling facet of this growth narrative. In 2022, the general insurance market took center stage, accounting for a substantial 82.3% of the UAE's overall insurance industry.

With recent regulatory shifts favoring this insurance category, particularly in terms of health insurance, a surge in growth is anticipated for the upcoming year. This phenomenon is further amplified by the mandate that necessitates health insurance coverage across the UAE.

As a consequence, health insurance premiums are on an upward trajectory, creating a catalyst for substantial expansion in this insurance vertical.

Leading the Charge: Personal Accident and Health Insurance

Notably, the landscape of general insurance in the UAE has already witnessed personal accident and health insurance taking the lead. These segments accounted for an impressive 57.6% of gross written premiums in 2022. The incorporation of new technologies holds the promise of elevating this vertical to even greater heights.

GlobalData's Senior Insurance Analyst, Swarup Kumar Sahoo, underscores the significance of health insurance mandates, stating that health insurance, previously mandatory in Abu Dhabi since 2006 and in Dubai since 2014, has now been extended to all of UAE in 2023. This extension is poised to fuel substantial growth within the general insurance sector, particularly starting in 2023.

Driving Forces: Health Insurance Premiums and Post-COVID Developments

The projected growth in health insurance premiums stems from a multitude of factors. The aftermath of the COVID-19 pandemic, coupled with elevated inflation rates, has led to a surge in health insurance claims.Consequently, the average health insurance premium displayed a series of increments.

A growth of 6% was witnessed during the transition from Q1 2022 to Q3 2022, followed by a 5% rise between Q3 2022 and Q4 2022. This trend was further amplified with a notable 20% surge from Q4 2022 to Q1 2023.

These developments, along with the introduction of mandatory health insurance, are projected to drive the UAE general insurance market's Compound Annual Growth Rate (CAGR) to 9.6%, propelling it from AED 34.6 billion ($9.4 billion) in 2022 to AED 54.8 billion ($14.9 billion) by 2027.

Synergy from Property and Motor Insurance

The landscape of growth within the general insurance market is also supplemented by property and motor insurance. Accounting for 16.2% of the sector, property insurance seamlessly complements health insurance in the broader general insurance category. 

Notably, motor insurance experienced an average growth of 7.5% between Q1 2022 and Q4 2022. This growth is attributed to the integration of advanced safety features and the escalating costs of auto parts. The upward trend in motor insurance premiums was discernible from the Q4 2022 renewals, cementing its role as a supportive pillar of growth in the UAE's general insurance sector.

In essence, regulatory reforms, health insurance mandates, and the interplay of various insurance segments are shaping a promising future for the UAE's general insurance market, signaling the potential for substantial expansion in the coming years.

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Written by - Tashika Chopra