The retail and commercial insurance industry in the UAE is expected to stabilise in 2025, with a trend towards growth on the back of a strong economy, says Suresh Nair, Executive Director of Gargash Insurance, one of the country’s leading insurance intermediaries.

The industry, particularly the motor and property insurance markets, was hit hard by the rains last April, and premiums shot up as companies struggled with an industry loss in excess of $3 billion.

“After the increases in motor premiums in the first four or five months of last year following the rains, the rate of growth has plateaued as we enter 2025,” says Nair. “Hopefully, given no further similar extreme weather events, we will see some elasticity in these rates.”

Effect of the rains

Listed insurance companies in the country saw an average growth of about 21 per cent on their revenue, and a profit before tax of about 8 per cent, according to reports on the third quarter of 2024 from Badri Consultancy. This is after the adjustment of re-insurance recoveries.

However, if you were to remove the top five companies – which showed a growth of almost 27 per cent on the gross revenue and a profit of 28 per cent – from the reckoning, the numbers look very different.

“Looking at the industry as a whole, there is an increasing gap between the top five and the rest of the companies,” explains Nair. “The rains in April affected a lot of companies, and that shows in the results.”

With the economy performing well, however, these numbers should improve across the board this year. “The insurance industry reflects the economic trends, so we should see further growth in the gross premiums, revenues and, hopefully, the bottom line in terms of profits,” he says.   

Growth in employee benefits

The fastest-growing sector by virtue of sheer volume will remain medical insurance, given the recent government regulations making health insurance for private sector and domestic workers mandatory across all seven emirates, with a trickle-down effect into other categories as well.

“The moment it’s made mandatory, a large segment of the untapped market has to move into the insurance fold, so obviously that would give a big boost to insurance numbers,” says Nair.

“Once these businesses come onboard as clients, both insurance companies and brokers will hope to see some sort of a corresponding growth in the non-medical classes of insurance as well.”

New categories in business insurance

There are basic covers that all businesses should consider, such as coverage for assets, liability, workmen’s compensation, and employer’s liability.

Business owners with increasing awareness are starting to look at relatively newer categories of business insurance too.

“We have seen increase in enquiries on coverages like credit insurance, cyber insurance, D&O (directors and officers liability),” says Nair. “These are from companies that have the basic suite of covers – fire insurance, liability, money/marine insurance – already in place, and are looking to cover new risk exposures.”

SMEs remains one of the fastest-growing segments in business insurance.

Digitisation of insurance

For individual low-priced insurance products such as home, pet and travel insurance, the trend is likely to be towards further digitisation, as the market develops, and as the awareness for the need of such products increases among customers.

“Due to their nature, these relatively simpler products are more amenable to being sold digitally, with customers looking to replicate the sort of experience they have while buying, say, airline tickets or retail items, or doing financial transactions with a bank online,” says Nair.

“The insurance industry is trying to see how to make that experience as seamless as possible, so that many of these covers can be easily and more efficiently bought online.”

Increased regulation and transparency

With the new regulatory changes aimed at enhancing customer protection and increasing transparency coming into effect on February 15 this year, the insurance sector in the UAE is also looking to adopt other forward-thinking changes.

“At Gargash Insurance, we have invested in IT systems for compliance, AML/KYC procedures to make sure we comply with the requirements,” says Nair.

“In the long run, these and similar regulations will serve to stabilise the insurance market in the country further, putting it on a par with global market standards.