UAE insurance sector's 2023 numbers show growth possibilities - and risks too

As we look back on the UAE insurance sector’s performance in 2023, we witness a narrative of robust growth intertwined with nuanced challenges of managing rising claims. As well as ensuring sustainable business practices.

The sector's growth, charting an impressive 12.7 per cent increase in gross written premiums to Dh53.2 billion, as reported by the Central Bank of the UAE, showcases the market's resilience and dynamic nature.

This trend, predominantly fueled by a 16.5 per cent leap in health insurance premiums and an 18.9 per cent surge in property and liability insurance, reflects the evolving needs of the UAE's diverse populace and the market's capacity to meet these demands.

The landscape is not without its complexities though. A notable downturn in life and savings insurance by 12.4 per cent year-on-year signals a shift in consumer behavior and market sentiment, necessitating introspection from industry stakeholders.

Rising claims are hurting

The increment in claims, marking a 12.8 per cent rise to Dh31.1 billion in 2023, underscores the critical challenge of balancing growth with sustainability. The spike in health and property and liability insurance claims, partly due to multiple unexpected events such as the increased frequency and severity of rains impacting motor portfolios, highlights the volatile nature of risk and the imperative of prudent risk management.

Addressing these calls for a multifaceted approach. Firstly, the industry must lean into innovative technologies and data analytics to enhance risk assessment and streamline operations. Leveraging these tools can provide more personalized, efficient services and better manage the risk portfolio.

Secondly, consumer education plays a pivotal role. Informing policyholders about the nuances of their policies, the determinants of premium rates, and the significance of risk mitigation can foster a more informed customer base that makes decisions benefiting both their interests and the industry's health.

More emphasis in mental health cover

Collaboration across stakeholders—including healthcare providers, insurers, and regulators—can pave the way for more sustainable practices. Discussions around the inclusion of mental health coverage, for example, reflect an evolving understanding of comprehensive healthcare needs and the importance of inclusive policies.

As the industry navigates these challenges, it's crucial to remember the foundation of insurance: shared risk for mutual benefit. Balancing growth with sustainability, therefore, is not merely a business imperative but a commitment to the community's welfare and prosperity.

The UAE insurance sector's journey is one of continuous adaptation and strategic foresight. With the collective efforts of insurers, regulators, and policyholders, we can ensure that this trajectory not only maintains its upward trend.

And that it does so in a manner that is equitable, sustainable, and responsive to the evolving needs of the UAE's residents and businesses.

Let us embrace these challenges as opportunities to innovate, educate, and collaborate, ensuring that the UAE's insurance market continues to be a beacon of growth, stability and resilience. We can forge a future where growth and sustainability are not at odds, but jointly steering the sector towards a brighter horizon.