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Insurance

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Robust economic growth in Dubai's financial sector has resulted in strong parallel growth in the field of insurance.

The UAE insurance industry continues to promise growth as the largest market in the GCC region, with 45% of the region’s combined $14.7 billion of insurance premiums. Dubai in particular has benefited from the recent economic recovery and has the potential to register double-digit growth in the insurance segment in 2013. Across the UAE, the insurance industry posted 10% growth in 2011 and an 11% increase in 2012. If growth continues apace, the value of UAE insurance premiums in the non-life segment could reach AED29.1 million by 2014. According to Business Monitor International, the non-life insurance segment was valued at AED25 million in 2013, while the life insurance side weighed in at AED3.6 million.

Although life insurance penetration rates remain lower than the global average, the estimated growth rate for the segment in the UAE was 13% in 2011 and approximately 16% in 2012. Meanwhile, the rising number of homeowners seeking to insure their property coupled with mandatory health insurance laws coming into place is expected to further lift the sector in 2013. Motor insurance is also required in the UAE, giving much-needed business to a market that some suggest is saturated.

Takaful, or Islamic insurance, is also expected to be an important growth area in Dubai. In line with Islamic principles, takaful offers “the voluntary provision of mutual assistance, where all clients enter into a cooperative agreement to insure one another,” according to the Dubai Chamber of Industry and Commerce. Although off to a slow start, rising incomes throughout the GCC and developing Muslim countries such as Indonesia and Malaysia may lead to an increase in demand for takaful services. According to industry experts, the global family takaful industry is headed toward sharp growth, tripling to $5.6 billion by 2016. Since 2008, the number of people with takaful policies has grown by a CAGR of 32%, according to a report released at the 8th Annual World Takaful Conference in Dubai in April 2013.

HEALTH & HOME

With analysts predicting that the property and medical sectors will see significant growth in 2013, health and home insurers are poised to capitalize on new opportunities. New regulations on medical and health insurance could lead to tremendous growth in the short term. Currently, 1 million people are covered by health insurance policies in Dubai.

The Dubai Health Authority (DHA) has been working to implement mandatory health insurance for local workers since 2009. Although the massive task has since hit a number of speed bumps—largely a result of financial uncertainty—the proposal is set to become legislation in 2013. However, once the law is established, it will take about three years for the mandatory health insurance plan to by fully rolled out. Once installed, employers will pay the Dubai government between AED500 and AED800 per year per employee, who will be expected to register with outpatient clinics to receive basic healthcare services. Under the scheme, the number of Dubai residents with health insurance could reach 2 million, doubling the current figure. Abu Dhabi has already enacted such a plan, and now 98% of its workers are covered under some form of health insurance.

In a move to expand the number of medical institutions that accept insurance and improve the quality of state-run establishments, the DHA is currently in the process of opening up government hospitals and clinics to insured residents. Up until April 2013, Dubai residents were only authorized to use one approved insurance provider and a government health card for health services at state-owned hospitals.

In the same month, the DHA announced that Dubai residents are now able to file complaints about health insurance providers through an online portal run by the authority. The iPROMeS system can be used to alert the DHA if customers believe their insurance companies have refused to cover a service or health test that they were entitled to. It will also function as a forum for Dubai residents to express their opinions, feedback, and suggestions about health insurance services in the Emirate.

Both the growing number of properties being built in Dubai and the ongoing need to protect existing ones are driving the market for homeowner insurance in the Emirate. “The property boom which specifically drove the economy of Dubai to a large extent in the past will continue to do so even in the present,” Mutaz Dabbagh, General Manager of Al Sagr Insurance, explained to TBY. “It is like a domino effect; the more property, projects, and engineers you have, the more insurance is necessary.”

Following a huge fire that occurred in Tamweel Tower, AXA Insurance (Gulf) noted that the number of house insurance policies had increased 20 fold. This rapid growth reflects the increasing number of expatriates that are no longer willing to risk the protection of their property, especially in a market where regulations and maturity differ from their country of origin. “Even if expatriates come from mature markets where they are usually 100% insured, they come to this region and are often not insured,” Jérí´me Droesch, CEO of AXA Insurance (Gulf) told TBY. “It is key for expatriates to acquire home insurance first and foremost, not only to protect their contents, but also their families with third-party liability cover.” Should this advice be heeded, home insurance may become one of the key drivers of growth for the future of Dubai’s insurance market at large. As one of the major players in the segment, AXA Insurance (Gulf) is working to increase the awareness of the population toward homeowner’s insurance by explaining the benefits and helping local and foreign residents avoid difficult situations.