Listed insurers' combined profit before tax increased by 8% to AED2.0bn ($544m) in the first nine months of the year, compared to AED1.8bn in the first three quarters of 2023.
Nine out of 27 listed companies lowered their profits in the January-September 2024 period, compared to the corresponding period in 2003, according to an analysis by Badri Management Consultancy.
In its report titled “UAE Insurance Industry Performance Preliminary Analysis – Q3 2024”, Badri says that the proportion of Industry profits driven by insurance service results dropped from 60% to 45%, crossing the key half-way point. In other words, more than half of the industry profit was not derived from insurance results but from investment and other income.
Insurance revenue
The listed insurers reported a combined insurance revenue of AED32.1bn in the first nine months of 2024, 21% higher than the AED26.5bn reported in the corresponding period last year.
This growth is likely to persist, fuelled by higher premiums and a shift in consumer preferences towards comprehensive motor insurance and increased adoption of home insurance.
Insurance service results
Insurance service results for the analysed listed companies saw a 19% decrease to AED892m in the first nine months of this year from AED1,100m in the corresponding period in 2023.
The leading five companies in this regard reported a combined insurance service result of AED870m in the first three quarters of this year from AED 913m in the corresponding period last year, a 5% fall.
Market concentration
The overall concentration of revenue and profitability in a handful of companies increased this year compared to the same period in 2023. While the revenue share (68% vs 65%) and profit share (85% vs 78%) of the top five insurers increased slightly, their share of insurance service results was 98% in the first nine months of this year compared to 83% in the corresponding period in 2023.
The top five insurers in terms of insurance revenue were Orient, ADNIC, DAMAN, Sukoon and Dubai Insurance. The top five in terms of profits were Orient, DAMAN, ADNIC, Sukoon and NGI.
Need to improve underwriting and claims management
In summary, the insurance industry in the UAE has demonstrated solid revenue growth in 2024, driven by increased premiums and changing consumer preferences. However, the decline in insurance service results, coupled with an increasing reliance on investment and other income for profitability, highlights emerging challenges in sustaining profit margins purely through core insurance operations.
The growing concentration of revenue and profitability among top players underlines a shifting competitive landscape, where market share and operational efficiency are crucial for resilience and growth. As such, the industry will need to balance growth in premiums with enhancements in underwriting and claims management to sustain long-term profitability.