Investments in the United Arab Emirates’ insurance sector surged to a massive AED40 billion ($10.899 billion) in 2014, the country’s economy minister says.
Investments in the insurance sector rose by 10 per cent in 2014 to AED40bn compared with AED37.8bn in 2013 ($10.290 billion), according to preliminary figures released by the Insurance Authority, His Excellency Sultan Al Mansoori, UAE Minister of Economy, tells Al-Ittihad.
Al Mansoori, who is also Board Chairman of the Insurance Authority, says investments in the insurance sector are projected to grow by another 10 per cent in 2015 to reach an all-time high of AED44bn ($11.798 billion).
The minister reveals that the authority plans to amend the insurance law in a bid to ensure speedy management of standing issues and compensations payment, as well as enhance the authority’s role in dispute settlement.
Speaking on why the authority limited insurance companies’ investments in the stock market, Al Mansoori says the measure aims to not put insurance firms’ funds at risk or make them subject to financial or price shocks.
Meanwhile, the Islamic insurance (Takaful) sector faces major challenges including profitability, the lack of innovative products and the need for more qualified manpower, according to investors.
In remarks to Emarat Al Youm, they say that the Takaful industry is required to explore further investments and that Islamic insurance companies must shun price competitiveness.
“The slower pace of growth in the Takaful market is not a worrying indicator when compared with the first years of this sector,” says Tamer Saher, Head of Product Development, RGA Middle East.
He says Takaful companies offer lower prices in order to secure a larger share of the market, especially auto insurance.
Fareed Lutfi, Secretary General, Emirates Insurance Association, stresses the need for a new and innovative work mechanism and better training of workers in this sector.