While UAE insurers need to allocate higher capital reserves, it will be well worth the effort. The IFRS 17 adoption sets them up for high growth chances. Image Credit: Shutterstock

The UAE insurance sector is on the brink of a transformation, as the International Financial Reporting Standard 17 (IFRS 17) acts as a catalyst in this metamorphosis. Its adoption isn’t just a nod to regulatory mandates, but a strategic initiative aimed at amplifying the financial resilience of insurance companies in the UAE.

This move is thus a testament to the unwavering commitment to strengthening the UAE’s insurance fabric. The deployment of IFRS 17 is set to usher in greater financial transparency for insurance firms, leading to a robust solvency framework. When that happens, it would be a foundational pillar for the longer-term stability of the industry.

A fortified solvency structure also paves the way for more favourable engagements with reinsurance partners, who will be playing a pivotal role in this evolving narrative. Their involvement is not just ancillary, but central to the stability and growth of the UAE insurance market.

As insurance companies recalibrate their financial strategies in line with IFRS 17, reinsurers stand as the bedrock, providing the necessary capital, risk management expertise, and strategic support. Their role is instrumental in ensuring the market remains buoyant and resilient, especially in the face of regulatory shifts and economic fluctuations. The synergy between insurers and reinsurers will be the driving force behind a more transparent and dynamic insurance market in the UAE.

It’s evident that regulatory changes, especially the impending enforcement of IFRS 17, have been influential. This directive necessitates that insurance entities earmark additional capital, which could potentially trigger a surge in premiums in the foreseeable future.

Premiums posted higher growth

The growth trajectory of the UAE’s insurance market paints an optimistic picture. Parallel to the regional economic upswing, we project a corresponding rise in Gross Written Premium (GWP). We also anticipate a surge in insurance penetration, gauged as a percentage of GDP. This too underscores the sector’s inherent potential and the escalating adoption of insurance products among the UAE populace.

While motor insurance once dominated the growth narrative, contemporary trends indicate a shift. We’re witnessing accelerated growth in domains like health, property, home, and life insurance. This diversified pattern is indicative of the market’s maturity and the eclectic needs of clientele.

The UAE insurance market is poised for a vibrant future, with IFRS 17 and the invaluable support of reinsurers shaping its path. As we traverse this journey, the primary focus remains on enhancing the service spectrum and making a significant contribution to the overarching growth of the UAE’s financial landscape.