Posted on: 25-05-2016 in Insurance
The media spotlight has been on UAE insurance ever since compulsory medical insurance began to roll out in 2014 courtesy of the Dubai Health Authority.
And now consumers are starting to discover other forms of insurance. UK expats are asking: What’s out there to protect my future? What products allow me to do something sensible with the money I am earning tax-free right now?
So here at Holborn Assets, we have reviewed the key issue of Income Protection (IP) insurance, – where you can learn how to protect your future income against serious injury or accident.
But there’s another biggy in the insurance field we would like to cast a broader eye over. The sector in question is in exciting shape, and very supportive to expat customers. Introducing the Dh8 billion Dubai Life Insurance sector.
Accident and injury aside – what about if the worst happens and your life is taken? Protecting your family will be your first thought.
Do it now if you are going to do it at all – the Dubai Life Insurance sector is lifting off at a growth rate of 11% a year and is crammed with over 60 competing insurers, offering great deals. Get in before the market matures. Seize deals that will become a thing of the past.
Right now, the Dubai Insurance Sector, in general, is certainly a dynamic and rewarding sector to just poke around as a UK expat (however old you are!).
There are three reasons why:
All Change at the Top of the Sector
The big players of the Dubai insurance sector are playing musical chairs in 2016. With Zurich leaving all but Life Insurance, AXA entering many areas for the first time and the UAE Insurance Authority talking about building a national Life Insurance company, change and opportunity are what your Life Insurance year is all about.
But why is one insurance giant all but leaving the sector whilst another equally influential player wants in for keeps? Both Zurich and AXA are playing their cards close to their chests.
A November 2015 Reuters report said that “Zurich Insurance Group will exit its general insurance business in the United Arab Emirates by the end of 2016 after a review concluded the investment needed in the market was not justified by its limited growth potential.”
Zurich will continue to offer Life Insurance in the UAE, despite dispensing with its other products. Zurich may well share its competitor AXA’s possible view that the Dubai Life Insurance sector is a hotspot of opportunity not to be missed at any cost.
French insurer AXA is setting up shop for Life Insurance and saving policies in the UAE as of the second or third quarter of this year. And AXA’s ‘Green Crescent’ is here to stay. Gulf News was told by the new CEO of AXA Insurance (Gulf), Cedric Charpentier who confirmed “the fact that the AXA Group is here to invest in this region, and most specifically in the UAE, in the long term. Some competitors – like Zurich – are pulling for the market and it is not at all what we have in mind.”
So why are AXA so keen to stay and build up a Life Insurance offering to expats? Charpentier of AXA (Gulf) said “the fundamentals are good” and that “populations will still grow.” AXA expect a high premium per capita from the Dubai Life Insurance sector.
In February 2016, the UAE Insurance Authority revealed discussion to found a national Life Insurance company in which stakes would be held by national companies. The idea has been presented by Ibrahim Obaid Al Zaabi, Director-General of the Insurance Authority to, among other things, “realise the interests of the market and the national economy as well.”
In the UAE’s Life Insurance sector, four out of five companies are foreign. And it is only natural for local insurers to centralise their efforts to some degree. But whatever the rationale for the mooted new national life insurance company, the proposed development spells good news for the UK expat. And that’s simply because competition – especially organised competition – puts pressure on premiums and customers pay less.
So with Zurich, AXA and the UAE Insurance Authority all making dramatic plays in the Dubai Life Insurance sector, a major restructuring of the sector’s top tier is looking likely. Product offerings are likely to be up in the wind, that’s for certain – and likely to stay there as competition intensifies in line with the sector’s explosive growth.
What experts call the ‘gross written premium’ of the UAE’s Life Insurance sector has shown a whopping 18.7% annual growth rate since 2011. And growth is expected to continue at an annual rate of 10.8% until 2019.
The Timetric Insurance Intelligence Centre, who are behind the positive projections, says that “the UAE’s growing expatriate population, positive economic outlook and adoption of new solvency standards are expected to be the main drivers behind this growth.”
…Based on Low Existing Life Insurance Take-Up in the UAE
The reason Zurich are prepared to stay in Dubai life insurance and AXA are so keen to get into it, is that the sector is under-penetrated. In other words, enough people don’t have Life Insurance that it’s well worth setting up shop.
On the face of it, the UAE is not an obvious target for Life Insurers because it actually has the highest penetration of Life Insurance in the GCC. But we are a big fish in a small sea. The ‘Life Insurance penetration rate’ for the UAE in 2014 was 0.62%; in contrast, South Korea’s was 9.2% and Taiwan’s, 15.3%.
We’ve got a long way to go in the UAE Life Insurance sector.
“There is a very promising outlook for market growth,” affirms Raymond Hurley of UK Accountancy giant PWC. “On the retail side, the whole life side of insurance is under-penetrated.”
The Life Insurance sector in the UAE is rife for development. Expect a shifting landscape of product offerings as companies experiment; and, here, bargains can be grabbed from even the top players. Talk to a broker and get a taste of your options so you’re ready to move before the market becomes less competitive.
There are two reasons why you, as a UK expat, can expect a generous welcome from a Life Insurer: there’s a lot of expats, and we have been, in comparison to other groups in the UAE, conducive to Life Insurance pitches in the past:
For the Life Insurer, the UAE offers a great commercial combination: many consumers without the product who might be likely to buy the product. The problem insurers face is competition, so premiums are generally under pressure to be low – which is, of course, all the customer wants to hear! So it’s a win-win for insurer and customer.
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Well, that’s all very reassuring, you may well say – but how do I about go about actually looking into life insurance? Do I even need life insurance? How much is it going to cost? All these and more are questions Holborn Assets will be happy to answer in person, over the phone, and in overview as a companion article coming soon.
In the meantime, we urge you to do your own research however you can. Asking friends and family what experiences they’ve had with financial products, companies and brokers is a great way to start because you can trust their opinion.
After all, it’s your family that a life insurance policy protects – so their involvement from an early stage is a meaningful step.
It’s up to you. The next move is yours.