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In 2019 the UAE had the highest insurance penetration and density in the GCC at 2.9 per cent.

Just like every other industry, Covid-19 has affected the insurance sector too.

However, there has been an important silver lining to the crisis for the life and health insurance segments, according to one of Dubai’s main players.

“The pandemic has helped in creating more general awareness about the need for life insurance and health cover and an emergency fund,” says Pradeep Mishra, Resident Manager at LIC International.“Therefore, we will see degrowth in business from last year, but things already started improving from the fourth quarter of 2020.”

Health insurance in the UAE is mandatory for employees and floor pricing for the premium has been fixed.

However, because of Covid-19, new services will come into play this year such as vaccinations for the disease and potential increased wellness offerings for employers who have staff returning to an office or production environment. These services will increase the healthcare cost, which will form the backbone for health insurance pricing.

Other tangible effects of the pandemic on the overall insurance industry include changes to underwriting policies and procedures, disruption in sales targets, increase in claims cost – and in some cases reduction in the premiums.

“The general insurance sector has witnessed increased claims due to business interruption, workers compensation and so on,” explains Abhishek Jajoo, CEO of AJMS Global.

On the positive side, claims incidents in some segments such as motor and industrial coverage reduced due to government-imposed lockdowns.

Digital-first strategy

Covid-19 has given new urgency to a digital-first strategy for insurance companies so they can ensure seamless delivery to the customer – from enquiry to policy issuance.

Technology was vital in helping UAE insurers shift to remote work environments and in ensuring employees had the tools to do business while remaining connected with distributors and clients.

Due to restrictions in face-to-face meetings, sales of life insurance were affected. “However, with vaccines in the market and support from government decisions, the industry is gaining momentum in 2021,” adds Mishra.

“There has been a complete change in life insurance regulations, product pricing and distribution, which is now more beneficial to the customer in order to sustain the future market.

“We foresee a maximum enhancement to the digitalisation of the business, which will change the future market dynamics of the whole industry in the UAE.”

In terms of other pressing market challenges, the industry must adopt significant regulatory requirements such as IFRS 17 by 2023 – a massive shift in its accounting and reserving procedures.

The UAE has also taken significant steps to combat money laundering, and insurance companies are busy implementing controls to ensure they comply with the laws and standards.