Islamic insurers are expected to turn to motor lines to boost profitability, according to one consultancy.
Saturation in other insurance sectors is likely to drive the trend says Hatim Maskawala, managing director of Badri Management Consultancy, an actuarial consulting company.
Health insurance is especially busy in the wake of mandatory health insurance in most emirates and especially in Abu Dhabi.
His comments come amid a shake-up in motor insurance this year that has resulted in greater levels of protection for vehicle owners that is lifting the price of premiums.
“The rates are quite low on the vehicle side, there is a possibility that it will grow over time over the next two or three years,” said Mr Maskawala. “This might help profitability as it will grow in volume and then in prices. The companies will raise the prices to make sure they don’t lose more money.”
Mr Maskawala was speaking at the World Takaful Conference in Dubai, where delegates gathered to discuss the fortunes of an industry facing challenges that include too much competition as well as the difficulty of selling a product that is more difficult to explain to customers than the conventional variety.
Both takaful insurers, another appellation for Islamic insurers, and conventional insurers are going through tough times and analysts expect that a wave of consolidation is likely to reduce the number of insurers.
Many have emerged in recent years and a number are struggling to become profitable. That has made it difficult for some to stay afloat, especially those that made risky investments in the stock market in recent years and suffered heavy losses.
There are 91 registered insurance companies in the UAE, according to the Insurance Authority. While this has been good for consumers, it has led to losses among many insurers as prices for insuring everything from cars to houses have fallen. Some have quit the non-life insurance business altogether in the UAE, such as Zurich Insurance, which exited in November 2015.
Analysts including those at the consultancy firm PwC are, however, upbeat about long-term growth. PwC has said the insurance market in the Middle East has significant growth potential, with an average insurance take-up of just 0.3 per cent in life insurance and 1.1 per cent in non-life insurance.
mkassem@thenational.ae
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