The United Arab Emirates (UAE) general insurance market is forecast to register double-digit growth of 13.2% in 2023, supported by regulatory developments and rising insurance premium rates, according to GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the UAE general insurance market accounted for 82.3% of the country’s conventional insurance industry in 2022. The market is expected to witness significant growth over the next five years, primarily driven by rising health premiums after the introduction of mandatory health insurance. Also, the rising average health insurance premium will support the growth.

Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, comments: “Health insurance, which was made mandatory in Abu Dhabi in 2006 and Dubai in 2014, has also been made mandatory across the UAE in the first quarter of 2023. As a result, health insurance is expected to play a major role in driving the overall general insurance growth starting 2023.”

Personal accident and health insurance is the leading general insurance line of business, accounting for 57.6% of the gross written premiums in 2022. It grew at a compound annual growth rate (CAGR) of 3.5% during 2018-22 and is expected to grow at a CAGR of 11.7% during 2022-27. With the implementation of mandatory health insurance, it is expected to register a year-on-year growth rate of 17.1% in 2023.

Sahoo adds: “An increase in the average health insurance premium will also drive the growth of personal accident and health insurance in 2023. The health insurance premium increased due to the growth in claims following COVID-19 and high inflation in the country. The average health insurance premium grew by 6% during Q1 2022 and Q3 2022 and by 5% between Q3 2022 and Q4 2022, further grew by 20% during Q4 2022 and Q1 2023.”

Property insurance is the second largest general insurance line of business, occupying 16.2% of the gross written premiums in 2022. Rising investment in infrastructure projects will drive the growth of property insurance, which is expected to grow at a CAGR of 5.4% during 2022-27. The UAE is expected to invest $160 billion to develop renewable energy projects throughout the country. Also, it has allocated 3.8% of its budget for infrastructure development during 2023-26.

Motor insurance is the third largest general insurance line of business, accounting for 11.8% of the gross written premiums in 2022. An increase in motor insurance premiums along with a rising number of accidents is expected to drive the growth of the segment, recording a CAGR of 5.9% during 2022-27.

Sahoo continues: “The increase in motor insurance premiums started showing in the Q4 2022 renewals. Motor insurance premiums grew an average of 7.5% during Q1 2022 and Q4 2022. The newly introduced safety features and expensive auto parts have also pushed up motor insurance rates.”

The remaining line of businesses accounted for a combined market share of 14.4%, with a 10.1% contribution from miscellaneous insurance lines. Unemployment insurance, which was made mandatory in 2023, will support the growth of miscellaneous line. The line of business is expected to grow at a CAGR of 9.1% during 2022-27.

According to the regulation, all employees need to apply for the insurance by 30 June 2023, failing which they need to pay a penalty of AED400. The premium price for unemployment insurance ranges from AED5 to AED10 per month. As of April 2023, one million employees had subscribed for unemployment insurance, which is expected to support the overall growth of the UAE general insurance market.

Sahoo concludes: “Post COVID developments such as the introduction of mandatory health insurance and the rise in health insurance policy prices are expected to drive the UAE general insurance market to grow at a CAGR of 9.6% from AED34.6 billion ($9.4 billion) in 2022 to AED54.8 billion ($14.9 billion) in 2027.”