Emerging Trends In UAE’s Insurance Industry

October 1, 2023by SHMA

The UAE has a strong economy and is a leading financial center in the Middle East. The insurance industry in the UAE is one of the most promising and rapidly growing industries in the world. In recent years, there have been several emerging trends in the UAE’s insurance industry.


According to a report by Markets and Markets, the industry is expected to grow from $16.9 billion in 2020 to $20.7 billion by 2025, at a compound annual growth rate (CAGR) of 3.4%.


The growth of the insurance industry is being fueled by both regional and global factors. On the regional front, increased awareness about the benefits of insurance among individuals and businesses, implementation of compulsory health insurance in Dubai, and strong economic growth are driving demand for insurance products. Globally, rising income levels, favorable demographics, and increasing urbanization are also acting as tailwinds for the industry.


Health insurance is another important segment within the UAE insurance industry and is growing at a rapid pace due largely to government initiatives such as mandatory health cover for certain categories of workers and free basic health cover for all UAE nationals.


Finally, property & casualty (P&C) insurers are likely to see healthy growth on account of an increase in construction activity as well as higher spending on property maintenance thanks to mandatory P&C covers for properties located in certain high-risk areas.


While there are many positive factors driving growth in the UAE insurance industry, it faces some challenges that could impact its future development. One key challenge is adverse selection whereby people who believe they are more likely to make claims are more likely to buy policies than those who believe they have low probability of making claims. This can result in spiraling costs for insurers leading them to try and offset these costs by either hiking premiums or withdrawing from certain markets altogether.


Another challenge comes from the lack of data and actuarial science in this part of the world which makes it difficult for underwriters to accurately price risk and leads to premiums that may be too high or low relative to actual levels of risk.


As the insurance industry continues to grow and evolve, it is important for insurers to keep up with these trends in order to remain competitive.