Growth Continues for UAE Insurance Market: Gross Written Premiums Rise by 18.5% YoY in Q1 2024 to AED 21.1 Billion: CBUAE Report

Last updated on : 04 Jul 2024
6 min read

The Central Bank of the UAE (CBUAE) reported that the UAE's insurance sector experienced continued growth in Q1 2024, with a significant increase in gross written premiums. Gross paid claims across all insurance plans rose by 18.3% YoY to AED 8.4 billion in Q1 2024.

In the CBUAE's Quarterly Economic Review for June 2024, it was noted that the number of licensed insurance companies in the UAE remained steady at 60, including 23 traditional and 10 takaful national companies, and 27 foreign companies. Insurance-related professions saw an increase, reaching 500.

The report highlighted a year-over-year (YoY) increase of 18.5% in gross written premiums for Q1 2024, totaling AED 21.1 billion ($5.74 billion). This growth was driven by a 24.6% YoY rise in property and liability insurance premiums, a 15.1% YoY increase in health insurance premiums, and a 15% YoY rise in insurance of persons and fund accumulation premiums, largely due to higher group and individual life insurance premiums.

Increase in Gross Paid Claims Gross paid claims for all insurance types rose by 18.3% YoY to AED 8.4 billion in Q1 2024, mainly due to a 47.1% YoY increase in claims for property and liability insurance and a rise in claims for insurance of persons and fund accumulation.

Growth in Technical Provisions and Invested Assets The total technical provisions for all insurance types grew by 6.9% YoY to AED 78.8 billion in Q1 2024, up from AED 73.7 billion in Q1 2023. Invested assets in the insurance sector reached AED 72.2 billion (54.8% of total assets) in Q1 2024, compared to AED 70.5 billion (54.9% of total assets) in Q1 2023.

Decline in Retention Ratio The retention ratio for written insurance premiums across all types fell to 50.2% (AED 10.6 billion) in Q1 2024, from 53.2% (AED 9.5 billion) in Q1 2023.

Well-Capitalized Insurance Sector The report noted that the UAE insurance sector remained well-capitalized overall. The ratio of own funds to the minimum capital requirement rose to 376.9% in Q1 2024, from 340.6% in Q1 2023. The ratio of own funds to solvency capital requirement reached 194.8% in Q1 2024, compared to 198% in Q1 2023, due to an increase in own funds eligible to meet solvency capital requirements. However, the ratio of own funds to the minimum guarantee fund decreased to 301.5% in Q1 2024, from 309.3% in Q1 2023.

Improved Profitability Profitability improved, with the net total profit to net written premiums increasing to 8.0% in Q1 2024, from 7.8% in Q1 2023. Return on average assets also rose to 0.6% in Q1 2024, compared to 0.5% in Q1 2023.

Takaful Insurance: As stated in the CBUAE 2023 annual report the Takaful fund is now a separate legal entity providing enhanced protection for Takaful customers following the issuance of Law No. 48 (the "Insurance Law 2023"). The CBUAE also introduced a Shari’ah governance standard for Takaful insurance companies, mandating a three-lines-of-defense approach in their Shari’ah governance frameworks to ensure compliance with Islamic principles and promote Emiratisation within Shari’ah governance functions.

Summary of the CBUAE Annual Report 2023: Insurance Sector

The Central Bank of the UAE (CBUAE) reported that the UAE insurance sector saw significant growth in the first quarter of 2024, with a notable increase in gross written premiums and paid claims.

Key Points:

  1. Gross Written Premiums:

    • Increased by 18.5% year-over-year (YoY) to AED 21.1 billion ($5.74 billion).

    • Property and liability insurance premiums rose by 24.6% YoY.

    • Health insurance premiums increased by 15.1% YoY.

    • Insurance of persons and fund accumulation premiums grew by 15% YoY.

  2. Gross Paid Claims:

    • Increased by 18.3% YoY to AED 8.4 billion.

    • Property and liability insurance claims rose by 47.1% YoY.

  3. Technical Provisions and Invested Assets:

    • Technical provisions grew by 6.9% YoY to AED 78.8 billion.

    • Invested assets amounted to AED 72.2 billion (54.8% of total assets).

  4. Retention Ratio:

    • Decreased to 50.2% (AED 10.6 billion) from 53.2% (AED 9.5 billion) in Q1 2023.

  5. Capitalization:

    • Own funds to minimum capital requirement ratio increased to 376.9%.

    • Own funds to solvency capital requirement ratio slightly decreased to 194.8%.

    • Own funds to minimum guarantee fund ratio decreased to 301.5%.

  6. Profitability:

    • Net total profit to net written premiums increased to 8.0%.

    • Return on average assets increased to 0.6%.

 

Table 1: Data in Table

Metric

Q1 2023

Q1 2024

YoY Change

Gross Written Premiums (AED)

17.8 billion

21.1 billion

+18.5%

Gross Paid Claims (AED)

7.1 billion

8.4 billion

+18.3%

Property & Liability Insurance Premiums (AED)

-

-

+24.6%

Health Insurance Premiums (AED)

-

-

+15.1%

Insurance of Persons & Fund Accumulation Premiums (AED)

-

-

+15%

Technical Provisions (AED)

73.7 billion

78.8 billion

+6.9%

Invested Assets (AED)

70.5 billion

72.2 billion

-

Retention Ratio

53.2%

50.2%

-3%

Own Funds to Minimum Capital Requirement Ratio

340.6%

376.9%

-

Own Funds to Solvency Capital Requirement Ratio

198%

194.8%

-3.2%

Own Funds to Minimum Guarantee Fund Ratio

309.3%

301.5%

-7.8%

Net Total Profit to Net Written Premiums

7.8%

8.0%

+0.2%

Return on Average Assets

0.5%

0.6%

+0.1%

 

Table 2: Key Indicators of the Insurance Sector (AED billions)

Description

2023 (Q1)

2023 (H1)

2023 (Q1-Q3)

2023 (Full Year*)

2024* (Q1)

Gross Written Premiums

17.8

27.2

42.0

53.5

21.1

• Property & Liability

6.5

9.9

16.6

20.8

8.1

• Health Insurance

9.3

14.0

20.1

26.0

10.7

• Persons and Fund Accumulation

2.0

3.3

5.3

6.7

2.3

Gross Paid Claims

7.1

14.1

23.1

31.7

8.4

• Property & Liability

1.7

3.9

5.7

7.5

2.5

• Health Insurance

4.9

9.2

14.4

20.1

4.9

• Persons and Fund Accumulation

0.5

1.0

3.0

4.1

1.0

Technical Provisions

73.7

76.7

75.0

75.8

78.8

Total Invested Assets

70.5

72.9

74.4

76.8

72.2

Total Assets

128.3

127.7

131.6

131.7

131.7

Total Equity

26.3

27.0

27.9

27.8

27.9

 

Table 3: Insurance Soundness Indicators (%)

Description

2023 Q1

2023 H1

2023 Q1-Q3

2023 Full Year

2024 Q1

Reinsurance Ratio

Retention Ratio

53.2

53.8

52.5

53.2

50.2

Capital Adequacy Ratios

Own Funds to Minimum Capital Requirement (MCR)

340.6

352.4

349.8

364.2

376.9

Own Funds to Solvency Capital Requirement (SCR)

198.0

203.4

207.3

217.1

194.8

Own Funds to Minimum Guarantee Fund (MGF)

309.3

308.9

310.6

309.4

301.5

Earnings Ratios

Net Total Profit to Net Written Premiums

7.8

10.4

12.1

8.8

8.0

Return on Average Assets

0.5

0.5

0.6

0.35

0.6

Note: Some of the data represented in the tables above may be estimated, preliminary or cumulative. Source: CBUAE

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