Enhanced technical results and pressure on solvency levels have been the main highlights of UAE insurance companies’ performance so far in 2025. This positive development is expected to continue as the market dynamics offer ample growth opportunities, says Fidelity United Insurance’s (Fidelity United) Mr Ahmed Nasef.
In 2025 to date, the UAE insurance market has reported encouraging results with a recovery in financial performance being the most significant development, said Fidelity United CEO Ahmed Nasef.
“As we have seen in industry reports, in 1H2025, listed insurers’ revenue registered 19% y-o-y growth to AED24.6bn ($6.7bn) with strong momentum in motor and health. Underwriting discipline improved significantly as insurance service results rose by 68% y-o-y, reflecting more sustainable pricing. Importantly, profitability has shifted towards core underwriting rather than relying on just investment gains.”
The other major development is that the insurance sector’s regulator, the Central Bank of UAE (CBUAE), has continued to focus on solvency and governance which lift market entry requirements, gradually consolidating the marketplace, he said. “A number of non-compliant insurers (listed companies or branches of international companies) were suspended due to breaches of solvency rules and/or other regulatory requirements.”
Factors contributing to industry’s profitability
On growth factors, disciplined underwriting and prudent pricing are driving the market’s positive performance in 2025, said Mr Nasef. “The strong first-half results were driven by a few factors. Firstly, sustained premium rate levels and improved risk-based pricing supported revenue growth. Secondly, insurers demonstrated tighter cost and claims discipline, with underwriting margins doubling from 2% to 4%.”
Thirdly, he added, “Capital strengthening and regulatory oversight imbued confidence and stability. Finally, investment income still contributed, but around 80% of industry earnings now come from insurance service results, which is a healthier balance.”
He explained that the transformation being seen in the market this year is linked to losses suffered in 2024, which have affected reinsurance terms and the overall profitability of insurers, pushing them to correct the technical side of doing business.
“Therefore, there was a correction movement in the market, be it on the rates front or other technical aspects. This correction was the outcome of the unpleasant results in the previous year, and, indirectly, the regulatory push for sound standards,” he said.
He added that, eventually, operators have become more efficient in underwriting, including setting the right pricing and selecting risk. “We are also seeing better cost management and claims settlement in the market.”
Insurers’ response to emerging risk needs reinsurance support
Emerging risks are now front and centre, said Mr Nasef. “Climate-driven Nat CAT exposures, cyber threats, and specialty cover, like liability, are in growing demand. We see more and more of these products turning into compulsory requirements rather than being nice-to-have coverage.”
He added that the industry is responding to the emerging risks with new products, but affordability and reinsurance support are key challenges. “We are seeing early progress, more cyber policies in the market, explicit flood and climate riders, and tailored SME products, but it will take continued collaboration with reinsurers to scale them.”
Reinsurers press for risk sharing over risk transfer
He added that the April 2024 rains reminded everyone that Nat CATs are not rare events but recurring risks. “Reinsurers have already responded with tighter terms and higher costs. This is manifested in the push by the reinsurers for more risk sharing rather than risk transfers from insurers. For our local market, reinsurers have adopted more rigid pricing for Nat CAT risk, adjusting reinsurance structures. For example, there are fewer surplus reinsurance offerings but more quota-share and Xol set ups with loss corridors and sliding scale commissions mechanisms to ensure risk sharing with reinsurers rather than risk transfer set-ups.”
Mr Nasef noted that this has led insurers to embed resilience in their offerings. “We also see a clear shift towards more sophisticated CAT modelling and technical underwriting.”
He added, “In summary, the majority of the market is now more worried about profitability rather than solely revenue and market share.”
Technology & distribution
Technology is fundamentally reshaping distribution as well as insurers, said Mr Nasef. “Aggregators, bancassurance, and embedded insurance on digital platforms are growing strongly, particularly in motor and medical lines. However, traditional brokers remain vital for complex risks. The winners will be those who integrate both, delivering speed and transparency digitally, while maintaining advisory strength for corporates.
“We at Fidelity United, for example, quadrupled our investments in technology in 2025 compared to 2024 to improve the customer experience, particularly in claims management, which is the moment of truth for our customers. We strive to provide seamless servicing and rationalise our costs by making sure our platforms will serve our planned business acceleration.”
Technology execution, however, remains a burden, he said. “The challenge for many insurers is not buying technology but embedding it into day-to-day operations to truly change the way business is done. At Fidelity United, we’ve already delivered over 20 internal transformation projects, the majority technology driven. These initiatives enhance compliance, improve partner and customer experience, and generate measurable cost savings, proving that digitalisation, when done right, delivers results.”
Market concentration & M&A
The UAE market remains fragmented with around 60 players operating in the sector. Of the 27 listed insurers, revenues are concentrated among the top five, who control nearly 70% of premiums, observed Mr Nasef. “Consolidation is inevitable. M&A is a viable solution, but successful deals require integration discipline and cultural alignment. Regulatory solvency pressures are already nudging weaker players out, and we expect this trend to accelerate. The golden balance for those who do not wish to disappear is accelerating business growth while maintaining profitability, which is a tough balance to achieve, yet not impossible.”
Despite the UAE being the largest MENA market, the number of providers in the country is more than the market can take, he said. “This goes to around 160 brokers in the market, which is close to the three brokers to one insurer ratio. Therefore, there is a need to reduce the number of direct insurers to have a few but strong enough players to serve the market.”
Major opportunities in the UAE market
Pockets of opportunities in the UAE insurance market are concentrated in three major domains, said Mr Nasef. “First, health insurance, driven by mandatory coverage expansion and demand for higher-end products. Second, SME and specialty lines such as cyber and liability, which remain underpenetrated. Third, digital retail segments, where a young, tech-savvy population is demanding fast, seamless solutions.”
In addition, in 1H2025 alone, around 50,000 SMEs companies were launched in the UAE. “The SME segment is heavily underpenetrated, which opens great potential for tailored insurance solutions.”
Geographically, he added, “Growth is not only in Dubai and Abu Dhabi but also across the Northern Emirates, particularly, SME and retail penetration.”
Return of fierce price competition and other challenges
Despite the positive performance that listed insurers have reported, the industry still faces challenges. On top of these is the return of intense price competition, said Mr Nasef. “As insurers deliver stronger results, there is always the risk of reverting to aggressive price wars, which ultimately erode profitability. We’ve seen this cycle clearly in neighbouring markets. For instance, in Saudi Arabia, the industry moved from losses to profitability through disciplined technical pricing, only to slip back into non-technical competition once margins improved, leading again to losses.
“Fidelity United’s strategy is clear: we will differentiate based on superior service and customer experience, not on being the cheapest player.”
He added that continued regulatory pressures pose challenges as well. “While some players may see regulation as a burden, I view it as an opportunity. The CBUAE’s focus on solvency, governance, and compliance is gradually strengthening the market by encouraging consolidation, leaving only well-fortified insurers standing. At Fidelity United, we have proactively reinforced our capital base, governance structures, and risk management practices, ensuring we remain resilient and compliant as the bar continues to rise.”
Talent, the ultimate differentiator, is another barrier to overcome, he added. “In a market where products can easily be replicated and pricing can fluctuate; people are what truly set insurers apart. The industry faces a shortage of highly skilled professionals in areas such as underwriting, actuarial science, data analytics, and digital distribution. Fidelity United is making talent a strategic priority through upskilling our workforce in digital and technical capabilities; building a culture of ownership and performance; investing in leadership development and localisation: and recognising and rewarding service excellence.”
UAE remains a promising market
Despite the challenges, the UAE insurance sector remains a dynamic market offering plenty of opportunities, said Mr Nasef. “The UAE market is unique, and there are rewarding returns for companies that put in the effort, innovate, and maintain their credibility.”
Dubai-headquartered Fidelity United is listed on the Abu Dhabi Securities Exchange. At a general assembly on 13 October 2025, shareholders approved the company’s plan to increase its share capital from AED160m to AED267m through a rights issue.
The AED107m rights issue will be implemented in three stages as follows:
- Phase One: AED30m as soon as possible
- Phase Two: AED30m in February 2026
- Phase Three: AED47m in December 2026. M