UAE Insurance Market Set for Dh14 Billion Growth by 2028
Title: UAE Insurance Market Poised for Dh14 Billion Growth by 2028, Non-Life Segment Takes the Lead
The United Arab Emirates (UAE) insurance market is anticipated to experience substantial growth, reaching Dh14 billion by 2028, with the non-life segment leading the expansion, as revealed in a recent study by investment banking advisory firm Alpen Capital. The study projects a compound annual growth rate (CAGR) of 4.9%, propelling the market from $14.1 billion (Dh51.7 billion) in 2023 to $17.9 billion (Dh65.7 billion) by 2028.
Non-Life Segment Takes Center Stage:
The study highlights the non-life segment's pivotal role, projecting a CAGR of 5.2%, reaching $14.4 billion in 2028. This growth is attributed to factors such as improving macro-economic conditions, the extension of mandatory health insurance coverage to the Northern Emirates, and the initiation of large-scale infrastructure projects.
Infrastructure Projects as Catalysts:
Over the next two years, the UAE is set to witness infrastructure projects amounting to $29 billion, expected to surge to a staggering $199 billion over the next five years. Major projects, including the $11 billion Etihad Rail, $5.9 billion hyperloop project, and $2.7 billion Sheikh Zayed double-deck road project, are anticipated to fuel economic growth and contribute significantly to the non-life insurance sector.
Unemployment Insurance Scheme Impact:
The introduction of the Unemployment Insurance Scheme in the UAE, with more than 6.7 million residents enrolled by November 2023, is poised to attract additional workers, bolstering the growth of the non-life insurance sector. The study predicts that by 2028, non-life gross written premium in the UAE will represent 36.3% of the total non-life gross written premium in the GCC.
GCC Insurance Market Overview:
Alpen Capital's study extends its insights to the wider GCC insurance market, forecasting a growth of $10 billion by 2028. Factors driving this growth include resilient economic expansion, a consistent rise in population, increasing demand for health and life insurance, and ongoing infrastructure development projects.
Key Drivers in the GCC Insurance Sector:
- Real Estate Projects Support Insurance Demand: The GCC's real estate projects valued at $1.6 trillion in 2022 are expected to boost insurance demand and fortify the region's insurable assets.
- Regulatory Strengthening and Mandatory Schemes: Government efforts to strengthen regulations, implement and develop mandatory insurance schemes, and an uptick in mergers and acquisitions are projected to enhance near-term premium growth.
- Increased Demand Across Sectors: A rise in population at a CAGR of 2.0% between 2023 and 2028 is anticipated to elevate the demand for insurance in various sectors such as property, vehicles, and health.
Post-Pandemic Dynamics:
The study notes that the demand for insurance has increased post-pandemic due to regulatory initiatives in the GCC, including the introduction of unemployment insurance. Economic improvements within GCC nations have instilled confidence in insurers, prompting a focus on risk management practices and insurance program reorganization.
Competitive Landscape and Future Trends:
The GCC's insurance industry remains highly competitive, featuring a mix of international and national insurers. This diversity is expected to constrain future price increases. The non-life insurance sector is projected to grow at a CAGR of 5.4%, comprising 89.2% of the total insurance market by 2028, reaching $39.6 billion from $30.4 billion in 2023.
In conclusion, the study paints a promising picture for the UAE and GCC insurance markets, with strategic factors such as infrastructure projects, regulatory initiatives, and growing demand contributing to sustained growth in the coming years.
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By- Sahiba Suri
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