The officials of insurance sector said that the insurance industry in Gulf Cooperation Council (GCC) has started recovering after the announce the VAT in UAE and it is more positive this year as compared to the last two years. It has happened due to the increment in the prices of oil and the enhancement in the growth of the economy.
Ghulam Teli who is an independent insurance analyst said that the insurance sector in UAE has started recovering again.
Insurance Sector in UAE 2018
In the previous year, there was a downfall in the growth of industry due to the reduction in the prices of oil and weak global economic conditions but the situation is now stable and the industry has started rising back. We are anticipating that the insurance industry in UAE will be improved in the second quarter of 2018.
“Q1 2018 will still have legacy effects of 2017, but we now see the 2017 results of most insurances companies coming out positively which will allow them to invest more in growth,” Teli said during the Health Insurance Forum held recently in Dubai.
One of the main issues this previous year was that the profit of the insurance industry had fallen. However, both the top line and bottom line are expected to be positive in 2018. The profit figures of the first quarter of 2017 were down, whereas in the second quarter there was a visible improvement in the results of the insurance industry and in the fourth quarter it was positive.
According to Howard Gough, CEO of EMEA, Cigna, due to the strong regulatory environment in the insurance sector across the region, the consolidations are being anticipated.
It is also anticipated that consolidation would enhance the efficiency of the insurance industry as well as competitiveness. Finally, it would help to create more positive results in the insurance market.It has also been pointed out that due to the presence of too many players and tough competition in the market, consolidation would be applied in the insurance industry across the region.
Presently, there are three consolidations in which the work is going on in the GCC region as it is the requirement of the market. Additionally, new companies are entering the insurance industry every day. It is anticipated that those companies which will choose consolidation will bring positive results and other companies will have to face negativism.
There is also news of the discussions being under process for M&As in GCC but the details are not available at the moment.
As for the impact of the VAT, both residents and companies have not been adversely influenced by the introduction of VAT in UAE. However, based on the executive regulation released by the Federal Tax Authority in the UAE, the indication is that there will be an impact on health insurance premiums.