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Recently released market study: United Arab Emirates Insurance Report Q1 2011

Recently published research from Business Monitor International, "United Arab Emirates Insurance Report Q1 2011", is now available at Fast Market Research

 
PRLog - March 7, 2011 - The development of the UAE - particularly Dubai - as a regional hub for insurance and other financial services will likely be complicated by the volatility in the markets following the problems experienced by Dubai World in late 2009. Nevertheless, the UAE's physical infrastructure, the willingness and ability of the government of Abu Dhabi to continue to provide support to Dubai and the UAE's competitive advantage in logistics and pharmaceuticals mean the insurance sector should continue to develop.

Dubai's problems have overshadowed other challenges. The UAE's insurance sector, like its counterparts in other Middle Eastern countries - and developing countries where commerce is driven by patronage networks focused on wealthy families (eg: the Philippines) - is fragmented. Most insurance companies are small operations by the standards of anywhere other than the Middle East and are listed affiliates of local industrial conglomerates. Few have the benefits of economies of scale or have access to the advantages that come from being a part of a broader multinational group. Few have access to the skills and resources that would allow them to compete as providers of life insurance and other long-term savings products or expand beyond the UAE. On the basis of figures provided by companies to the stock exchanges of Abu Dhabi and Dubai, BMI believes Oman Insurance Company (OIC) is the largest local player, accounting for approximately 20% of total premiums written by national companies, or 14% of total premiums. We believe that by this measure, the next largest insurance companies, Abu Dhabi National Insurance Company (ADNIC) and Islamic Arab Insurance Company, are about half the size of OIC.

Over the long term, it is reasonable to expect that the UAE will play a significant role in the development of Islamic finance in general and takaful in particular. In the short term, however, structural problems such as the general lack of popular understanding of shari'a-compliant products and the shortage of suitably qualified shari'a scholars is likely to continue.

In this report, we provide a breakdown of the insurance sector by line from the point of view of the regulator or trade association. The UAE's insurance sector is dominated by accident liability products, which account for half of non-life products. Life products are limited and make up less than a sixth of the market.

At the time of writing, we were able to ensure that the report includes actual data for 2009. We have generally been able to use data published in 2010 to adjust our estimates for the year as a whole. We estimate total premiums in 2010 of AED25,001mn. This includes non-life premiums of AED21,717mn and life premiums of AED3,283mn. In 2015, the corresponding figures are forecast to be AED39,046mn, AED34,072mn and AED4,975mn. In terms of the key drivers that underpin our forecasts, we expect nonlife penetration to rise from 2.03% of GDP in 2010 to 2.40% in 2015, and for life density to increase from US$186 per capita to US$242 per capita. BMI's Insurance Business Environment Rating (IBER) for the UAE is 54.2 out of 100.

Issues To Watch

Availability Of Skilled Talent

Until late 2008, the economic boom in the UAE meant that it was often difficult to find suitably skilled local staff to meet the requirements of the laws directing the 'Emiratisation' of the workforce. With the downturn in Dubai, this situation may well have changed.

Consolidation

In harder times it is less clear whether all the UAE's entrepreneurial families will remain committed to (generally non-life) insurance if it is a non-core activity for their business groups. There may well be mergers and acquisitions as some players seek to boost scale in a challenging environment.

Deal Making Through The DIFC

Prior to the problems with Dubai World in late 2009, the Dubai International Finance Centre (DIFC) had successfully attracted a variety of financial services companies seeking to establish representative offices. However, deals that were actually booked through the DIFC were fairly small in number and size, particularly after the global financial crisis reached its critical point in September 2008. The number of organisations present at the DIFC and, more importantly, the number of deals that are actually being done, will provide a useful indicator of how Dubai is developing as a regional financial centre.

Islamic Finance

The figures that have been published by the national insurance companies which are listed on the stock exchanges of Dubai and Abu Dhabi indicate that in H110 much of the growth in overall premiums was accounted for by leading takaful operators. Salama and Aman alone accounted for AED329mn of the AED619mn growth in gross written premiums (ie: for H110 compared to H109) achieved by the listed Emirati companies for which reports were available.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/123245_united_arab_emirates_in...

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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Industry:Finance, Research, Banking
Tags:insurance, uae, dubai, premiums, dhabi, difc, abu, non-life, Finance, islamic
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