Buses passing through Al Maktoum bridge will be temporarily diverted via Al Garhoud bridge
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Weak sales this year of new cars and homes together with construction delays and cancellations will slow the expansion of the country’s under-developed insurance business from its 43 per cent compounded average growth of the past four years.
However, the UAE’s relatively low level of insurance penetration, its economic potential and the nation’s young population and rising life expectancy all augur well for future growth, Alpen Capital said in an insurance industry study issued on Sunday.
Gross premium income for UAE insurers increased by 26.3 per cent last year, while, insurance penetration — or gross premiums as a percentage of the country’s gross domestic product — stood at 2 per cent. While this penetration rate is high compared to the Middle East’s overall rate of 1.5 per cent, it pales in comparison with the global average of 7.1 per cent, suggesting significant room for growth, the study said.
The Middle East’s insurance market is small and immature, accounting for less than 0.7 per cent of the global insurance market of $4.27 trillion in 2008. Conventional insurance continues to dominate the UAE market, but more insurers are also establishing Islamic-compliant businesses.
Takaful, or Islamic insurance, premiums represent just over 20 per cent of the GCC insurance market, and Takaful dominates the Saudi Arabian market. In the UAE, Takaful accounts for less than 20 per cent of the whole market, Alpen Capital Executive Director and Head of Equity Research services Tommy Trask said.
“Net premium income, after reinsurance and provisions for unearned premiums, continued to grow at about 20 per cent in the first and second quarters. This suggests the UAE insurers are retaining a greater part of risks that they have traditionally ceded to reinsurance companies due to concentration risk, technical complexity or lack of historic claims data,” Trask said.
UAE insurance companies have seen “a clear deceleration in gross premium growth in 2009, down from about 15 per cent in the first quarter to only 1 per cent in the second quarter,” he added.
The UAE insurance market is dominated by non-life business, driven by mandatory third-party auto insurance and health insurance for expatriates and growth in the construction and real estate sectors over the past decade. Non-life insurance accounted for 81.3 per cent of the total gross premiums in 2008, almost double the global average of 41 per cent.
The total insurance premiums in the Middle East and Central Asia grew 4.7 per cent in 2008, compared to a global decline of 2 per cent.
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