Digital transformation will drive the next wave of growth in insurance industry: Gargash Insurance

If the first leg of technology transformation, the insurance industry focused on enhancing internal efficiencies, the next leg is laying emphasis on improving customer experience and bolstering data and analytics capabilities, say top management executives at Gargash Insurance Services LLC.

Gargash Insurance has been investing significantly in its digital capabilities to become increasingly agile, innovative, and customer-centric. "We are looking to give customers a total solution on our website and decreasing the time lag between choosing a policy to buying one. The customers will not have to wait for a quotation; they will be able to choose a policy online and buy it on the website in just a few clicks. A few insurers are ready with the capability and others are onboarding with us. By the end of March, we will have providers giving customers more choices on our website," said Mustafa O. Vazayil, Managing Director, Gargash Insurance. "There is no better way than to invest in technology to improve efficiencies and match the aspirations of customers."

Talking about trends in the industry, M. Rajendran, Deputy Managing Director, Gargash Insurance, expects car insurance premiums to increase by at least 10 per cent this year. "Rising inflation is hurting the industry. The average claim cost has risen because of the higher price of repair and parts. Yet, the average premium has not kept pace with this change. Overall, car insurance premiums are definitely increasing this year," he said.

"Realistically, even though we think car insurance premiums should go up by 10 per cent this year, this is not for us to decide. Insurers have to take a call to ensure sustainability and maintain their bottom line. In an open market, competition often influences decisions. So, even if the average claim cost justifies an increase (in premium), there will always be a few insurers who would want to compete on the premium for volume sake. This impacts others who might want to raise their premiums but are unable to do so. In such a scenario, regulatory intervention helps," added Vazayil.

Customers with a clean claims record or less frequency of claims will, however, enjoy preferential rates, Vazayil said.

Motorists in the UAE have enjoyed discounted rates of up to 50 per cent on insurance during the first two years of the pandemic. Pre-covid, insurance companies in the UAE could offer up to 10 per cent discount to drivers with no claims history. The discount could go up to 30 per cent in case of a longer-term policy contract for a driver with no claims history. A few insurers had gradually started inching up premiums to bring them back to pre-covid rates.

On business opportunities, Rajendran noted there is huge potential in the market. "We did reasonably well in 2022 and registered growth of 16 per cent in business. This year looks good too, primarily because of the buoyancy in the overall UAE economy. We are seeing higher inflows of tourists and high net worth individuals who are choosing the UAE as their second home. There has been a rise in international firms looking to move their operations to the emirates. A number of global exhibitions are showing interest in hosting the events here. There is going to be more activity in trade and tourism, and the UAE is going to benefit extensively, and so will the insurance industry."

Domestically, the next quantum leap in the medical insurance industry will come from the Northern Emirates when health insurance becomes mandatory, said Vazayil. "We are already gearing up for that like other insurers and brokerage firms."

Gargash Insurance is aiming for at least 20 per cent growth across its verticals this financial year. "We are deeply entrenched in the SME sector and now we are focusing on big ticket clients to diversify our portfolio. It could include energy clients, port operators, real estate and infrastructure, large regional companies, etc.," noted Vazayil.

The two senior executives are confident that the insurance sector will expand despite any headwinds from western economies. "The UAE trades less with Europe and more with Asia and Africa, where the requirements will remain buoyant even if Europe slips into recession. Dubai is very resilient. We have seen this over the years. Businesses that have the strength and capacity like ours will surely benefit should there be any ripple effect of downturn in western economies. Smaller players would be forced to exit the market but we see that as an opportunity," said Vazayil.

Gargash Insurance Services LLC has offices in Dubai, Abu Dhabi, and Sharjah, and provides personal and commercial lines of insurance.