UAE Insurers see 19% revenue growth amidst IFRS 17 shift

AM Best expects consolidation from weak underwriting performance and higher costs. 

United Arab Emirates (UAE) governing bodies imposed measures to aid the “poor performance” observed in personal lines insurance and boost premiums in the country, according to AM Best.

The UAE's insurance regulator has tightened discounts on motor premiums to improve underwriting practices, yet competition continues to impact profitability.  Medical lines face fierce competition, straining underwriting profitability. Transitioning to IFRS 17 affected listed insurers but led to a 19% revenue growth. 

AM Best predicts consolidation due to weak underwriting performance and higher costs. Recent regulatory measures aim to boost personal lines insurance and premium growth. 

Motor loss ratio deterioration persisted despite discount disallowance in 2023, impacting technical profitability. Medical lines also faced profitability challenges due to claims inflation. 

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Mandatory medical insurance expansion in 2025 is expected to increase premiums. Regulatory changes allowing direct claims payment to healthcare providers may improve cashflows.

Corporate classes like commercial property drive profitability. Aggregate insurance revenue grew by 19%, with top insurers dominating the market.

IFRS 17 transition affected insurers' financials. Listed insurers reported a 35% increase in net profits in 2023, with mid-tier players showing significant growth. Weather events increase demand for insurance, particularly in motor lines. Geopolitical risks are not expected to disrupt the industry significantly.

Market consolidation is expected due to pressure on premium rates and claims costs. Recent M&A activity reshaped the insurance landscape.