As markets shift and technologies advance rapidly, the insurance sector finds itself at the crossroads where adapting to dynamic sectoral trends is no longer a choice but an imperative.
The insurance sector in the UAE has undergone major transformation in recent years. Regulatory reforms, geopolitical uncertainties, and macroeconomic pressures have all contributed to an environment where legacy infrastructure, systems and processes are being modified.
By integrating data, upgrading technology and reimagining risk to uncover new strategic opportunities, the sector is leveraging change to forge a future that is more agile, efficient and customer-centric.
Upward growth trajectory
While navigating through a wave of complex disruptive forces, the sector has managed to demonstrate resilience and strength. The transformation has not only started revolutionising traditional practices but also paving the way for sustained growth.
According to Alpen Capital’s GCC Insurance Industry Report, the insurance market in the region is projected to grow at the rate of 3.2 per cent from $26.5 billion (Dh97.32 billion) in 2021 to $31.1 billion in 2026. The UAE is expected to remain the largest insurance market in the GCC, with its share increasing from 44.6 per cent in 2021 to 46.5 per cent in 2026.
“The outlook for the GCC insurance industry remains positive owing to accelerated economic recovery, government’s diversification efforts, continued infrastructural development, push towards digitisation, and rising population over the forecasted period,” says Krishna Dhanak, Managing Director, Alpen Capital (ME).
Covid-19 has generated increased risk awareness and demand for insurance, both life and non-life. Meanwhile, regulatory developments have also supported sectoral growth.
“Due to the regulatory changes in the UAE, medical and motor insurance continue to grow while the wealthy and knowledgeable population is increasingly seeking more diversified insurance covers at better costs,” says Gautam Datta, CEO, Watania International Holding, which runs Watania Takaful. “Savings and pension-related life products are also emerging as key growth areas.”
Another segment that’s showing opportunities for growth is cyber insurance. “Along with traditional products, cyber insurance, which provides protection against the evolving threats of malware, data breach and ransomware, sees strong demand,” says Suresh Nair, Executive Director, Gargash Insurance.
M&A strategies driving success
In the ever-evolving landscape of insurance, mergers and acquisitions (M&A) are gaining prominence as players are looking to adapt and thrive amid sectoral changes and challenges.
“The GCC insurance sector has undergone significant changes in terms of capacity and pricing and organisations are likely to continue facing challenging trading environments,” explains Dhanak. “Simultaneously, intensifying competition, and high-operating costs combined with a strengthening regulatory environment are making it increasingly difficult for weaker players to sustain with the same level of growth and profitability. This is likely to lead to higher consolidation through increased M&A across the market.”
Last year, the National Takaful Company (Watania) merged with Dar Al Takaful to create one of the largest takaful entities in the UAE, while National Life and General Insurance Company (NLGIC) acquired RSA Middle East to form a multi-line insurance group. Earlier in 2021, Gulf Insurance Group (GIG), a leading insurer in Mena, acquired AXA’s operations in the Gulf.
“The insurance industry, including takaful, has long been too fragmented,” says Datta. “Consolidation provides economies of scale, synergies and financial muscle that enable the enlarged entities to expand and thrive. .
“The Central Bank of the UAE has also been strict in monitoring solvency and capital adequacy positions of insurance companies. This is driving consolidation of capital and more innovative and competitive services for individuals and businesses, which is beneficial for all sector participants,” he adds.
Unlocking efficiency through tech
At the core of transformation shaping the sector lies the power of technologies and data. With a keen eye on the shifts within the global insurance landscape, insurers in the UAE have actively harnessed cutting-edge technologies to propel efficiency, streamline services and enhance customer satisfaction.
From automating claims processing and using chatbots for customer support to leveraging AI and data to enhance underwriting accuracy, risk assessment, and customer experiences, organisations are embracing technologies across the board, with a strong focus on providing more personalised and seamless services.
“The pandemic, among other things, has greatly accelerated digital transformation in the insurance sector worldwide,” says Nair. “The world-class infrastructure in the UAE has facilitated the implementation of this trend. Another trend shaping the sector is the increasing customer preference for online transaction, especially in the personal line of insurance such as motor, medical and travel. This trend is expected to grow sharply in the future.”
The traditional notion of insurance has shifted, with clients increasingly seeking omnichannel touchpoints that offer seamless communication and informed decision-making.
“What’s most important now is how customers feel about the experience,” says Mufazzal Kajiji, CEO, Zurich International Life in the Middle East. “Insurance earlier used to be full of complex words and terms, but now it’s about making things easy to understand.”
Digitisation is also helping the insurance companies understand their customers better. “Internet of Things (IoT) devices and AI-based analytics are improving the insurance companies’ ability to gather, process customer data, and gain insights into consumer needs and risks related to both consumer behaviour and external factors,” says Dhanak.
“At the same time, regulators across the GCC have introduced new reforms as part of their broader fintech strategy, including the adoption of insurtech for insurance services. These initiatives are expected to make the GCC insurance sector more competitive, innovative and facilitate financial inclusion.”
Maximising the impact
The industry’s response to digitisation goes beyond the operational level.
“The global players based in the region are not only digitising the firm’s core operations but also focusing on innovation across the value chain – marketing and distribution, product development and underwriting, claims prevention and customer support – with the increased use of AI, IoT, drones, and blockchain,” Dhanak says. “AI is also helping firms to take a more granular approach and develop insurance plans that are customised to each individual. Furthermore, digitisation is helping insurance companies reduce customer acquisition costs, generating more value for marketing spend, and reducing the cost of processing claims.”
Since the merger in 2022, Watania Takaful has prioritised technology to transform its performance and customer service.
“Digitisation and AI are enhancing our data analytics and customer engagement abilities,” says Datta. “Combined with the unified and upgraded IT platforms, our technological infrastructure positions us for growth and scalability.”
Last year, Zurich introduced a customer-focused transformation aimed at simplifying insurance management, enhancing security, and ensuring access to crucial information. This initiative also involved equipping its advisors with tools to foster robust customer relationships.
“Our vision for a streamlined and secure insurance experience is powered by technology,” explains Kajiji. “We’ve made substantial progress in realising this vision, notably through initiatives like our digital platform, ZPRO, which has revolutionised the customer’s new business journey and redefined onboarding since its launch in 2020.”
Identifying a need to transform and simplify customer experience, Zurich introduced 13 new in-demand services on Zurich Online over the span of 18 months, which led to an 80 per cent increase in the adoption of online services since 2020 and an increase in digital engagement from 20 per cent in 2020 to 59 per cent in the second quarter of 2023.
Meanwhile, Zurich has expanded advisor-initiated online services, streamlining procedures like switches and reinstatements.
“Our upcoming mobile app, MyZurichLife, will offer real-time updates, reinforcing our dedication to both our advisors’ and customers’ convenience,” adds Kajiji.
Unleashing growth through customer experience
Amid this wave of digital transformation, customer satisfaction has also witnessed a remarkable shift. With user-friendly apps, chatbots providing instant support and personalised products, the sector is constantly working to meet customer needs swiftly and efficiently, fostering loyalty and long-lasting engagement.
“We have put the customer at the heart of everything we do,” says Datta. “Our main mission is to respond effectively and quickly to customer queries and support them when they need our help the most – at the time of claims. This is underpinned by our ongoing drive to streamline our technology and processes, from the initial enquiry to getting a quotation, a certificate and making claims, to ensure that everything runs smoothly.”
Technology, including AI and digital platforms, has substantially transformed how Zurich delivers and oversees insurance services in the UAE.
“Last year, we unveiled a vision centred on customer-centric transformation, enabling streamlined insurance management, secure operations, and access to vital information,” says Kajiji.
“This commitment extended to providing tools for advisors to establish strong customer relationships.”
Moreover, Zurich Online, covering approximately 80 per cent of frequently requested services, has drastically improved turnaround times, accuracy, and customer satisfaction.
“Technology has empowered us to prioritise informed customer choices,” he explains. “Zurich Online ensures that independent customer actions are backed by relevant and timely information, reducing drop-offs during critical processes. This tech-driven approach yields win-win outcomes for customers, distributors, and Zurich alike.”
The new generation of consumers, who represents a large part of the GCC population, has compelled insurance companies to create a new ecosystem in accordance with their changing digitisation preferences.
“Going forward, the demand for innovative, customised and convenient solutions is likely to compel insurance firms in the region to either develop in-house technological capabilities or collaborate with insurtech companies that can deliver improved customer experience,” says Dhanak. ■