Dubai’s Mandatory Health Insurance Law Will Help Promote Trade Competition

After experiencing massive loss in 2015, the UAE’s life insurance industry is recuperating with listed insurers in the UAE  showing signs of improvement during the first half of the year 2016.

Notwithstanding the various challenges it was facing with as a result of a reduction in oil prices which also resulted to fiscal pressure, unpredictable stock markets and slow going economic development, the UAE life’s insurance industry is regaining its momentum.

Things are starting to look up as the UAE’ local insurance market got a massive push from the Dubai mandatory health insurance project which came in full force in June 2016.

With regards to this new policy all residents in Dubai as well as Abu Dhabi are expected to get compulsory health insurance policies.

According to reports 29 listed insurers out of the overall 60 recorded a gain of Dhs573 million in the UAE trade as opposed to that of 2015 which was at DHs263 million.

Reports also claim that if the profits made during the first half of the year can be maintained to the end of the year, then it will be a great success from the losses suffered by the industry in 2015.

A 10% growth rate was recorded by traditional insurers in 2016, while in 2015 5% was obtained. Other larger insurers also recorded huge gains in the first half of 2016.

In terms of gross premium income, Oman Insurance maintained its position as the largest, Orient Insurance and Abu Dhabi National Insurance took followed respectively.

The cumulative growth rate of the three stakeholders was 46% of the overall market installment.

According to S and P “we have through a period of high competition, been pricing below a technically maintainable level, and less focus on business ventures which lead to overall losses and a weakened operating environment.”

The mandatory health insurance law released by the Emirates Insurance Authority, is presently being embraced by UAE insurers. The changes include financial, technical, investment and accounting aspects.

“Although insurers were able to go through the first stage with some amount of challenges, the real concern presently is completing the second stage which addresses the basis of calculating the technical provisions and asset distribution limits. The third stage will be addressing solvency margins, minimum guarantee amounts and asset distribution limits for real estate, the report stated.”

The second stage is expected to be completed by the end of the year by insurers while the third stage should be completed by the end of 2017.

The report went on to explain that, it is expected that during the course of the second stage, some form of unprepared issues will be experienced.

“Although no penalties have been mentioned against insurers who do not embrace the new laws, it is believed that the goal of the regulators should be to help improve underperforming companies before they reach extinction.

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