UAE Insurance Sector Reports 12.7% Growth In Gross Written Premiums In Q4 2023

The UAE insurance sector witnessed a notable expansion in the fourth quarter of 2023, with a significant increase in gross written premiums, as reported by the Central Bank of the UAE (CBUAE) in its latest quarterly economic report. This growth underscores the robustness and resilience of the insurance industry in the region, amidst a dynamic economic landscape.

According to the CBUAE, the gross written premium surged by 12.7 percent year-on-year in Q4 2023, reaching AED53.2 billion. This uplift was primarily driven by a 16.5 percent increase in health insurance premiums and an 18.9 percent rise in property and liability insurance premiums. Conversely, there was a 12.4 percent decline in the insurance of persons and fund accumulation premiums, mainly due to a decrease in individual life premiums.

The report also highlighted that gross paid claims across all insurance plans escalated by 12.8 percent year-on-year to AED31.1 billion by the end of 2023. The spike in claims paid for health insurance by 16.9 percent and property and liability insurance by 10.9 percent was partially offset by a 2.8 percent decrease in claims paid for insurance of persons and fund accumulation.

Furthermore, total technical provisions for all types of insurance experienced an 8.4 percent year-on-year increase to AED74.4 billion in Q4 2023, up from AED68.6 billion in the same quarter of the previous year.

Investments and Reinsurance

The volume of invested assets within the sector amounted to AED 76 billion, accounting for 60.4 percent of total assets in Q4 2023, an increase from AED 71.4 billion (59.4 percent of total assets) in Q4 2022. The retention ratio of written insurance premiums for all types of insurance stood at 52.9 percent (AED 28.1 billion) in Q4 2023, slightly down from 54.9 percent (AED 25.9 billion) at the end of the previous year.

Insurance Soundness Indicators

The UAE insurance sector's financial health indicators remained strong, with the own funds to minimum capital requirement ratio climbing to 335.7 percent in Q4 2023 from 309.3 percent at the end of 2022. This increase is attributed to a rise in own funds eligible to meet minimum capital requirements.

Similarly, the own funds to solvency capital requirement ratio improved to 221 percent in Q4 2023 from 208.5 percent in Q4 2022, reflecting an increase in own funds eligible to meet solvency capital requirements. However, the own funds to minimum guarantee fund ratio slightly decreased to 316.3 percent at the end of 2023 from 314.6 percent a year earlier, due to higher eligible funds required to meet minimum guarantee funds.

Profitability Indicators

In terms of profitability, the net total profit to net written premiums ratio increased significantly to 6.5 percent in Q4 2023, compared to just 2.9 percent at the end of 2022. Additionally, the return on average assets rose to 0.3 percent in Q4 2023 from a mere 0.1 percent in the previous year.

The sustained growth and resilience demonstrated by the UAE insurance sector are indicative of its robust regulatory environment and its capacity to adapt and thrive amidst economic fluctuations. With a stable number of licensed insurance companies and professionals, alongside positive trends in premiums, claims, investments, and profitability indicators, the sector is well-positioned for continued success moving forward.

With inputs from WAM