Stock Sukoon Insurance
The UAE insurance marketplace saw a welcome wave of consolidations, a process that's continuing. But the industry could do with more speed on such deal-making. Image Credit: Clint Egbert/Gulf News

Recently, the UAE insurance sector experienced another wave of consolidation, as Sukoon Insurance gained approval to acquire Arabian Scandinavian.

Several Takaful companies also merged lately. A recent report by Badri Management Consultancy reveals the top-line of listed insurance companies in the UAE experienced an 11 per cent growth, with premiums written rising in 2022. Despite the necessity for further progress, multiple opportunities exist for insurers to enable the industry’s sustainability.

The report also highlights a 56 per cent drop in profits for the rest of the listed insurers when excluding the Top 3 companies in terms of profitability. This suggests that many market participants have the chance to create more robust offerings instead of duplicating similar services.

Less reliance on undercutting competition

By offering distinctive value propositions to customers through innovative insurance products and services tailored to specific needs, insurers can deliver more, decrease price competition, and guarantee the industry’s sustainability.

Consequently, insurers in the UAE have the opportunity to develop specialized underwriting and risk-taking capabilities. Historically, regional insurers have depended on global reinsurers for the capacity and expertise required to underwrite many risks.

As the global reinsurance market continues hardening its stance, further exacerbated by considerable macroeconomic headwinds, UAE insurers can capitalize on building their unique underwriting expertise and focused value propositions. In doing so, they can set themselves apart, lessen their reliance on the global reinsurance market, and ensure they have adequate margins to serve their market sustainably.

Adherence to solvency regulations is mission crucial for insurers so that they possess adequate financial resources to fulfill their obligations to policyholders. It is vital for insurers to prioritize compliance with solvency regulations to guarantee the industry’s sustainability.

Get in risk-adjusted capital buffers

This involves investing in risk management capabilities and retaining sufficient risk-based capital reserves. By following compliance standards, policyholders will be better protected, and companies can preserve reputation.

The UAE insurance industry holds substantial opportunities for growth and enhancement of its long-term sustainability. Insurers should prioritize adherence to solvency regulations, as ell as cultivate specialized underwriting and risk-taking capabilities

These measures will help foster differentiation, and ensure the stability and security of the economy. The time is now for the UAE insurance sector to welcome a much-needed transformation to a more sustainable future.