Premium Opportunity


The familiar landscape of an underpenetrated market promises growth potential, while a crowded playing field could yet see consolidation.

The Emirate of Sharjah may well have the distinction of being the Islamic Culture Capital of the Arab region, but it certainly features more diversified economic activity than tourism alone. With a GDP of $27.2 billion, around 33% of all industry in the UAE located within Sharjah’s borders. This provides notable scope for insurers of both individuals and corporates. While no one sector of the local economy accounts for over 20% of GDP, according to the Sharjah Investment and Development Authority, several sectors do stand to boost the local economy in the short term, with a positive knock-on effect on the insurance universe. Transportation and logistics, to name one, is expected to be worth $1.7 billion by 2016.


With a combined insurance penetration rate of just over under 2%, the UAE market is clearly underpenetrated, and stands to grow in line with the familiar factors of GDP, a rising middle class, and the inculcation of a savings culture, predicated on greater public awareness of, and confidence in the financial services industry. Insurance industry growth in the Gulf has an estimated CAGR of 18.1% between 2012 and 2017 to $37.5 billion.
The UAE’s insurance industry is promoted and regulated by the Insurance Authority (IA) established under the Federal Law No. 6 of 2007. It is mandated with ensuring a conducive environment for sector development to enhance the broader capital markets, by fostering a climate of national savings in a competitive arena. Another task of the IA is to pursue Emiratization of the UAE insurance market.

As of 2014 there were 61 insurance companies, of which 27 were foreign insurers. This makes for a saturated market that could see consolidation in a fiercely competitive environment; the call was in fact made by the IA back in 2013. Eleven national and two foreign companies were engaged in the provision of comprehensive insurance activities (life assurance, fund formation and property and liability insurance). Companies providing property and liability insurance had a respective national and foreign breakdown of 20 and 17. Insurance companies providing life assurance and fund formation operations were broken down into two national and eight foreign entities, while just one company undertook credit export insurance business. As of end-2013 the UAE insurance sector employed 8,590 people, of whom 769 were UAE nationals, making for an Emiratization ratio of 8.9%. The IA has a 2015 target of 15%.


Another sector also bears the promise of becoming a capital markets dynamo, namely health tourism. The government of Sharjah is putting much effort into shoring up its health sector, both to address endemic lifestyle disease prevalent across the UAE, and to standardize it’s offering. And by 2016 the healthcare sector is foreseen growing to $1.8 billion. As Mark Adams, CEO of Anglo Arabian Healthcare explained in a TBY interview; “The government is making efforts to improve standards; there is an influx of corporate brands in Sharjah, and the market is seeing a lot of consolidation and building of new facilities.” The natural consequence of this is that, “There are now more groups large enough to effectively negotiate prices with insurance companies.”


The UAE economy saw a 4% expansion in 2013, and the net positive effect on key economic sectors reflected clearly in the insurance sector print. Indeed, the IA’s latest annual report confirms marked sector growth and economic contribution in 2013—the latest available data— where overall underwritten premiums stood at $8 billion, up 12.2% YoY, while among funds invested of $10.3 billion, 57.4% went to shares and bonds, and 26.5% to the banking system. Total premiums, up 18% YoY, were broken down into general premiums of $6.1 billion and life insurance premiums of $1.9 billion. In fact, insurance industry growth in the Gulf has an estimated CAGR of 18.1% between 2012 and 2017 to $37.5 billion.

The percentage of national companies to total non-life premiums generated in 2013 was 74.4%, up 10.6% YoY. Generated premiums from the property and liability insurance branches printed double-digit growth of 10.8% to $6.1 billion from $5.5 billion in 2012. Earned premiums from the property and liability insurance branch stood at $5.9 billion for the year. Fifty five percent of the underwritten premiums of property and liability insurance was claimed by national insurance companies where the breakdown for each branch is 65.2% for accidents and liability, 25.9% for fire, 27.4% land, sea and air transport, 63% medical and 19.2% in other risks insurance branches. Incurred losses for this branch before deduction of the re-insurance share was $3.9 billion. The loss ratio of property and liability insurance before deduction of the re-insurance was at 67.2% in 2013 down from 68.1% in 2012. The loss ratio breakdown by coverage type was 63.4% accidents and liability, 41.3% fire, 29.7% land, sea and air transport, 85.1% medical insurance and 70% other risks insurance.

In life assurance and the operations of fund formation total underwritten premiums came to $1.9 billion, the bulk of which, at 78.2% was accounted for by foreign insurers. In the property and liability insurance branch total underwritten premium came to $6.1 billion with 74.4% accounted for by local insurers. In terms of breakdown 44.1% derived from medical insurance, 32.8% from accidents and liability, 9.7% from fire policies, 7.6% from land, sea and air transport insurance and 5.8% per cent from coverage of other risks. Official figures put technical provisions for the life assurance and fund formation at $3.5 billion and properties and liabilities insurance $2.5 billion.

Meanwhile, in the Emirate of Sharjah for 2013 total policies for all branches stood at 300,998, where net retention was at 161,397. There were 264,476 policies in the accident and liability branch, and a retention rate of 95,613.


Takaful insurance embodies the concepts of mutual cooperation and risk sharing toward broader social well being. Like its conventional counterpart, it features both general (non-life) and family (life) segments. By 2010 the GCC takaful market had already registered a gross contribution of $5.7 billion, and yet in the UAE it was vying for premiums among already highly competitive branches such as motor. As of end-2013 ten national companies provided Islamic insurance, or takaful services. According to The National, as of 2013, takaful premiums represented less than 1% of sharia-compliant assets globally, having underperformed the growth of sharia-compliant equity instruments. Worldwide takaful premiums, excluding Iran, total $14 billion—a tiny fraction of the $4 trillion of insurance premiums underwritten worldwide. There is, in short, room for growth.


A milestone in the history of insurance within the UAE, Sharjah Insurance was established in 1970 and is registered with the UAE Federal Ministry of Economy. It was the first National Insurance Company to have been established in the Emirate.

As of end-December 2014 total revenues of $14.4 million were flat YoY, as was net income of $1.5 million. According to Bloomberg, while its debt to total capital ratio, at 7.40%, reflected the sector norm, neither operating profits nor liquid assets are sufficient to cover interest payments. The company’s forte is cash collection, and as of end-2014, uncollected receivables stood at $10.1 million. For 2014 total assets of $126.9 million were down YoY from $131 million. Total liabilities however, were down to $41.6 million from $48.1 million. Meanwhile, net insurance premium revenue for the year registered at $9.8 million on a yearly slide from $10.1 million. The company posted a net underwriting loss of $5.5 million, and profit for 2014 of $1.6 million.

Insurance penetration being low, along with the Emirate’s impressive drive to develop its health industry for domestic benefit and overseas appeal stand to fuel premium generation in the years to come.

You may also be interested in...

2nd day AD Finance Week


On the calendar

Abu Dhabi Finance Week 2022

View More


On the right track

Dubai metro route for sustainability

View More
Arabic woman weared in traditional UAE dress – abayain rising her hands on the sunset at a desert with Dubai city silhouette on the background.


The UAE Golden Visa

Will the UAE's Golden Visa scheme boost FDI?

View More


Sustainability’s SPARK

King Salman Energy Park LEED Certification

View More


A destination of choice

Madrid City Council

View More

Health & Education

Health Hub

Malaffi, Abu Dhabi’s Health Information Exchange Platform

View More


Better Local

Make it in the Emirates Campaign

View More


Community Driven

KIZAD as a hub for vaccine distribution in Abu Dhabi

View More


A Crude Calculation

Global oil and gas expansion

View More
View All Articles