A recent survey conducted among 1000 UAE residents by British international Internet-based market research and data analytics firm, YouGov suggests savings being the top priority now for 51% of surveyed UAE dwellers.
A similar study conducted by Zurich International Life Limited positively highlights the increased inclination towards Life insurance for 46% of respondents living in the UAE.
“The unprecedented nature of Covid-19 with the rising rate of infections and the increasing death toll across the globe has altered the mindset of individuals.” – Walter Jopp CEO, Zurich – Middle East
The life insurance sector in the UAE has been experiencing notable development following the distribution of holistic life insurance regulations by the Insurance Authority (IA), which came into existence on 16 April 2019. The regulations force controls on the commissions that are due to distribution channels, including insurance brokers, agents, banks and finance firms. The regulations put restrictions on the overall amount of commission and the way in which it can be paid.
According to critics, the UAE insurance business has been plagued with a lack of consumer security and authority over commission payments linked to certain life products. “This has unfortunately supported a lack of honesty in the business through various third party distribution channels, producing, in some cases in ‘mis-selling’. The essence and body of the new regulations approach these concerns to a large extent and are a welcome change to the UAE life insurance market.”
In 2018, the life insurance penetration percentage in the UAE was just 0.7. However, according to Alpen Capital, the UAE recorded the largest spike in insurance penetration at 2.9 percent in 2018. Insurance penetration in the region is predicted to remain between 1.8 percent and 1.9 percent from 2019 to 2024, below the global average of 6.1 percent, suggesting immense scope for growth in the area. Insurance density in the region is anticipated to grow from $502.9 in 2019 to $555.8 in 2024.
A market report by Milliman suggests that the UAE insurance market continued its bearing for a third consecutive year with an overall improvement in its profitability along with premium growth in 2019.
“Based on the preliminary disclosures (22 companies) and audited reports (eight companies) of the UAE insurance companies listed on the Abu Dhabi Securities Exchange and Dubai Financial Market, the Gross Written Premium (GWP) grew by 8.3 percent to Dh23.7 billion in 2019 following a small increase in 2018. The increase in premium was primarily due to movements between listed and non-listed insurers.” – Insurance Market Report.
According to the YouGov study verdicts, 46 percent of UAE residents had shown that life insurance is more important than compared to pre-COVID-19 scenarios. The sector has now outranked travel insurance by four times and property insurance, home finance and car loans, etc by 3.5 times.
Almost 50% of survey respondents suggested that they are inclined to acquire a life insurance policy online during the pandemic period. Trust in the insurer, manageable premiums and simplicity of terms and conditions are considered as the most important factors when obtaining a digital life insurance solution.
“The previous misconception of “it won’t happen to me” has been set straight and people are now coming to terms with the fact that the unexpected does happen and it can happen to anyone and everyone,” Jopp said.
“The pandemic is also changing the attitudes and preferences of how consumers want to purchase goods and services – this includes the consumption of financial services. With anxiety surrounding physical interaction with others, individuals are looking at ways to make purchases online from the safety of their homes and at a time of their choosing,” said the report.
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“The unprecedented nature of Covid-19 with the rising rate of infections and the increasing death toll across the globe has altered the mindset of individuals.”
