Avinash Babur
The UAE Health Insurance Landscape
The Middle Eastern insurance market has always been a fascinating one, particularly across the GCC (Gulf Community Countries) where the players are as diverse and dynamic as the population of the region itself. The UAE operates a particularly forward-thinking model, with the presence of the DIFC (Dubai Insurance Financial Centre) providing a home for insurers, reinsurers and brokers alike.
Aside from the unique, there were also some “familiar faces”, with international legacy insurers such as Norwich Union, General Accident, Commercial Union and Northern Assurance setting up home all across the Middle East.
This ever-evolving landscape certainly doesn’t disappoint when it comes to change. In the period from 2017 to date, the region has seen the exit of some leading luminaries: with big names such as Allianz-AGCS, Asia Capital Re, AXA, AXIS Capital, Beazley, Generali, Munich Re Syndicate & Swiss Re to name just a few. And as well as these interesting turns over the past 5 years, it appears there’s further twists of the tale set to come soon.
It’s not sure whether COVID-19 commercial changes or the change in strategy by their contemporaries has had an influence, but hot off of the press is the news that the world’s oldest insurer, RSA, is now set to follow suit, in a proposed sale of its Middle East business. The deal, which is subject to the granting of regulatory approval, is with NLGIC, the insurance subsidiary of OMNIVEST: and described as in support of their strategy to build a leading multi-line insurance group in the region.
So, what does this mean for the industry locally?
Shocking surprises or smart strategies?
Some might interpret these moves as “surprising”, but to those of us heavily engaged in the industry, we see them as strategic and part of a global plan rather than a regional reaction. It’s important to remember that many of these companies are well-established international organisations with their footprints firmly placed in countries outside of the Middle East. Many of these European giants, would have made similar moves following Brexit a few years ago, and for some, a decision to leave the bright lights of London as home was made. It’s also fair to say that the majority of the insurers operate a strategy of regular restructure: writing it into their medium to longer term business plans as a tactic.
Monoline versus multi-line, shrinking suppliers and acquisitions
Another important fact is that whilst most mentioned here are composite insurers, they did not necessarily operate on that basis in the region. Some companies played the “monoline market”, offering products in predominantly one class of business. This is a conscious business decision to take advantage of a particular specialism or risk appetite and can pay dividends, but can also prove regionally risky if that line of business hits turbulent times or becomes too transactional. Motor insurance is a great case in point. Few Insurers survive on writing Motor business alone: even the most prudent underwriters can get hit on their book of business given its highly competitive nature and claims costs.
It’s for that reason that insurers tend to write business as a “multi-line” approach. This allows them to offer their customers the convenience of a comprehensive product range, whilst consolidating their individual P&L’s into one overall “portfolio based” financial result.
It’s also not surprising to see the re-emergence of the acquisition. Whilst some companies are considering their exits, others are considering their expansion, so it can suit both to talk acquisition. The chance to sell up, ship out and use those sale proceeds to fund strategic plans elsewhere can be attractive and the allure of acquiring a leading brand name and their customer base is equally irresistible for the purchasing party.
Sounds like a winning combination and the future of insurance is assured.
