The UAE insurance sector continued to grow in Q4 2023, as reflected by the increase in the gross written premiums. As of year-end, the number of licenced insurance companies in the UAE remained at 60, the CBUAE announced in its quarterly economic report Q4, 2023.
The insurance sector comprised 23 traditional national companies, 10 Takaful national and 27 foreign companies, while the number of insurance-related professions remained at 491.
Gross Written Premium
According to the Central Bank report, the gross written premium increased by 12.7 percent YoY in Q4 2023 to AED53.2 billion, mostly due to an increase in health insurance premiums by 16.5 percent YoY and an increase in property and liability insurance premiums by 18.9 percent YoY, while the insurance of persons and fund accumulation premiums decreased by 12.4 percent YoY, resulting primarily from the decrease in individual life premiums.
Paid Claims
The report indicated that the gross paid claims of all types of insurance plans increased by 12.8 percent YoY to AED31.1 billion at the end of 2023. This was mainly driven by the increase in claims paid in health insurance by 16.9 percent YoY and the increase in paid claims in property and liability insurance by 10.9 percent YoY, partially offset by the decline in claims paid in insurance of persons and fund accumulation by 2.8 percent YoY.
Technical Provisions
The total technical provisions of all types of insurance increased by 8.4 percent YoY to AED74.4 billion in Q4 2023 compared to AED68.6 billion in Q4 2022.
Investments
The volume of invested assets in the insurance sector amounted to AED 76 billion (60.4 percent of total assets) in Q4 2023 compared to AED 71.4 billion (59.4 percent of total assets) in Q4 2022.
Reinsurance
The retention ratio of written insurance premiums for all types of insurance was 52.9 percent (AED 28.1 billion) in Q4 2023, compared to 54.9 percent (AED 25.9 billion) at the end of 2022.
Insurance Soundness Indicators
The UAE insurance sector remained well-capitalised in terms of early warning ratios and risk assessment. Own funds to minimum capital requirement ratio increased to 335.7 percent in Q4 2023, compared to 309.3 percent at the end of 2022, due to an increase in own funds eligible to meet the minimum capital requirements.
Also, own funds to solvency capital requirement ratio rose to 221 percent in Q4 2023 compared to 208.5 percent in Q4 2022, due to an increase in own funds eligible to meet solvency capital requirements. Finally, own funds to minimum guarantee fund ratio reached 316.3 percent at the end of 2023 down from 314.6 percent a year earlier, due to higher eligible funds to meet minimum guarantee funds.
In terms of profitability, the net total profit to net written premiums increased to 6.5 percent in Q4 2023, compared to 2.9 percent at the end of 2022. The return on average assets increased to 0.3 percent in Q4 2023 compared to 0.1 percent in the previous year.
WAM