First Gulf Bank launches life insurance products to boost earnings

There is a gap in the market owing to a high number of uninsured individuals, with products covering debt repayment in the event of death or illness.

First Gulf Bank yesterday launched a new range of insurance offering cover for the repayment of debts in the event of death or illness, as UAE banks continue to tap the fast-growing life insurance sector to boost earnings.

Girish Advani, the head of the mass market segment at FGB, said the new products were “part of a strategy to tackle the high level of uninsured or underinsured people within the UAE and the region”.

“The insurance sector in the [GCC] region, and particularly the UAE, has grown considerably in recent years but remains underdeveloped and behind the world average by a large margin. Insurance penetration in 2012, for example, was at 1.1 per cent, close to one-sixth of the global average.

“The UAE has made significant strides in the development of its insurance sector, which expanded at an annual average growth rate of 9.6 per cent between 2008 and 2012, reaching a value of $7.2 billion. However, much of this growth is because of compulsory covers and the UAE insurance market is still heavily weighted towards non-life insurance,” Mr Advani said.

Life insurance accounts for only 14 per cent of premiums in the region, according to the global insurer and reinsurer Swiss Re, compared to 58 per cent in developed markets.

Global primary life premiums continued to recover last year, with emerging market real premium growth above 6 per cent and advanced market growth at 2.3 per cent, Swiss Re said.

“Economic activity in the stable countries of the Middle East and North Africa region is supporting above 5 per cent growth in life premiums, but from a very low base,” it said in its forecast for 2014 and 2015 at the end of last year.

The outlook for the overall industry is positive.

“A return to economic growth in the mature markets is a good sign for insurance, and we see a positive outlook for the next two years. Emerging markets, especially in Africa and Asia, will definitely provide some of the more spectacular growth figures in non-life business as cities grow and people look for financial protection for their property,” said Kurt Karl, Swiss Re’s chief economist.

The UAE has the largest insurance market in the GCC, accounting for 44.1 per cent of the region’s gross written premiums in 2012, FGB said.

The Arabian Gulf insurance industry is expected to grow at a compounded annual rate of 18.1 per cent from last year to 2017 to a total value of $37.5bn, according to a report from Alpen Capital last year.

Local banks are moving into the life insurance market in the hunt for higher revenues in an increasingly competitive sector.

“The strong underlying growth in our lending and deposits, the success of new product lines in delivering new revenues such as insurance and investment in our retail division ... have all contributed handsomely to this year-on-year growth in revenues and the bottom line,” said Abdul Aziz Al Ghurair, the chief executive of Mashreq, after profits jumped in the first nine months of last year.

FGB reported a 15 per cent rise in profits last year.

Its new Insta product range has been developed in conjunction with the insurer MetLife Alico.

“Customers can enrol in any of the two new products – Insta Protect Plus and Insta Care (Critical Care) – instantly by providing minimal documentation and without having to undergo any medical tests,” FGB said.

Insta Protect Plus covers any unpaid financial liabilities, such as a loan, in the event of the policyholder’s death. It also offers a return of 50 per cent of the total premium paid upon maturity.

Insta Care provides a lump sum in the event of a critical illness.

In 2012, FGB launched a new account for customers looking to streamline multiple insurance payments.