Around 50% of UAE residents requested for Life Insurance the past month
Dubai: A study has revealed that 50% of the UAE residents consider Life Insurance very important after the Covid impact. The study has become relevant as it correlates with the landmark life insurance regulations issued by the Insurance Authority last year. As per the regulations, the penetration rate is below 1% as of the last data in 2018.
Zurich International Life Ltd commissioned this study, based on 1000 residents of UAE. It found that one in every 10 person considered life insurance important during the pandemic. “The unprecedented nature of Covid-19 with the rising rate of infections and the increasing death toll across the globe has altered the mindset of individuals,” said Walter Jopp, CEO of Zurich in the Gulf.
Regulations by Insurance Authority (IA)
The comprehensive new life insurance regulations that came out in April 2019 caused significant changes in insurance sector in UAE. Insurance Authority (IA) issued these regulations and this came into effect on 16th April 2019. The regulations imposed controls on the commissions that are payable to distribution channels, including brokers, agents, banks and finance companies. The regulations limited the amount and manner by which commissions are paid. It also restricted charges like surrender charges, which insurers can levy.
Economists say that UAE insurance sector has lacked a strong consumer protection. Control over the commission payments linked to certain life products. Most of these problems would be solved with the regulations having a strong hold on the sector. In 2018, the life insurance penetration rate in the UAE was 0.7 per cent. However, the UAE recorded the highest insurance penetration and density at 2.9 per cent and $1,194.7, respectively, in 2018. Insurance penetration in the region is expected to remain between 1.8 percent and 1.9 percent from 2019 to 2024. This should be well below the global average of 6 percent which indicates growth in the economy. Insurance density in the region is expected to increase from $502.9 in 2019 to $555.8 in 2024.
Insurance Market in UAE
According to a market report by Milliman, the UAE insurance market continued its trend for a third consecutive year. It marked an overall increase in their profitability along with premium growth in 2019. “The Gross Written Premium (GWP) grew by 8.3 percent to Dh23.7 billion in 2019 following a small increase in 2018. The increase in premium was primarily due to movements between listed and non-listed insurers,” relevant part of the report says. According to the YouGov study-findings, 46 percent of UAE residents indicated that life insurance is more important than before Covid-19. The sector now ranks over four times higher than travel insurance and 3.5 times more than property insurance.
Almost half of survey respondents indicated that they are likely to purchase a life insurance policy online during the pandemic period. What customers need is trust in the insurer and affordable premiums. Simplicity of terms and conditions also attract more customers. This is a point at which insurance companies have to convert ‘desire’ of the people to business.