Feb
16
UAE Travel Insurance Sector Expects Growth
By Marius | Published February 16, 2012
There may be boom times ahead for the UAE travel insurance market, as both inbound and outbound tourism numbers begin to rebound after a difficult couple of years. One of the Gulf state’s largest insurance companies has predicted travel insurance sales could now grow by 40 percent in 2012 alone.
Speaking at the Dubai Economic Outlook 2012 presentation on Wednesday, Sheikh Ahmad Bin Saeed Al Maktoum stated that the UAE economy would expect to grow by around 4.5-5 percent this year, and that the Gulf’s tourism and travel sectors would be major contributors to the country’s commercial development going forward. Buoyed by vast oil and gas wealth, the UAE economy had moved at a brisk pace up until the 2008 global financial crisis, when Dubai’s once powerful property and construction sector required a massive US$26 billion government bailout to restructure their considerable debts. This event of course impacted other sectors of the economy as well, with foreign investment and tourism declining in tow.
Dubai has since come back from the crisis however and, according to government officials, is now stronger than ever. According to the latest government estimates, the UAE’s GDP grew by about 2.5 per cent in 2010 and by more than 3 percent in 2011. This surge in economic activity has been driven by the Emirate’s trade, logistics and tourism sectors, which accounted for almost 60 percent of Dubai’s GDP growth in 2011.“These sectors have recently experienced vigorous growth, as demonstrated by the buoyancy in tourism and hospitality and the substantial increase in passenger traffic through Dubai International Airport in 2010 and 2011,” Sheikh Ahmad said, adding that the UAE’s financial sector has also remained resilient and robust, in spite of recent real estate challenges.
Dubai’s travel and tourism sectors are now forecast to grow by more than 6 percent each in 2012. Given these strong performance indicators, domestic insurance companies are becoming increasingly keen to establish a presence in the Emirate’s emerging travel insurance sector and to develop new products that effectively target both inbound and outbound tourists. An official from Dubai Islamic Insurance and Reinsurance Company (or AMAN Insurance) was on hand at the same event to explain what moves could now be made by insurers to capitalize on the increased international demand for travel insurance both into and out of the Emirates. According to AMAN, the UAE travel insurance market should grow by a considerable 40 percent this year as consumer spending confidence and tourism activity improves in the Gulf region and abroad. It also important to note that the UAE is fast becoming a prime medical tourist destination due to its well developed healthcare infrastructure, specialist doctors, state-of-the-art medical centers, and expat friendly communities.
Hussein Al Meeza, Chief Executive and Managing Director at AMAN, told local reporters that this forecasted growth had given his company the impetus to now consider a wider range of travel insurance initiatives for prospective UAE travellers and that developing this market further could prove integral to their overall success in the region. “The country’s travel insurance market has demonstrated key vibrancy despite the effects left behind by the global economic crisis,” Al Meeza said. Recent laws which have made travel insurance a requirement to securing travel visas to certain countries outside the Emirates have also contributed to this growth. In line with this development, AMAN has launched three new travel insurance products: Musafir, Shengen, and Haj & Umrah cover.
These products are each designed for specific travel activities and will provide comprehensive and cost-effective benefits for both individual and family policyholders in the UAE. The Haj & Umrah travel insurance policy has been specifically designed for travelers going on their annual pilgrimage to Mecca. The Shengen travel plan meanwhile will focus on travelers visiting any country within the Schengen European states (France, Italy, Spain, Germany and Sweden amongst them). Each insurance policy will provide certain core benefits to policyholders, including emergency medical expenses and hospitalization abroad, transport and repatriation services in case of serious illness or accident, personal accident cover, and medical referrals to local health professionals. Additional riders will also be made available for emergency dental care, medical evacuation, personal baggage, passport and money loss cover. Al Meeza explained that these new insurance products would give AMAN policyholders and prospective travelers “the safety, security and confidence of full coverage, giving them the advantage of enjoying their trips without any hassles or worries.”
AMAN has continued to be a market innovator in the UAE. The Dubai-based firm has consistently looked at ways to diversify its product portfolio and improve it’s presence across various insurance lines. Last year the AMAN, in a partnership with ICICI Lombard, developed the first insurance products geared towards the Emirate’s sizeable non-resident Indian workforce. This collaboration followed yet another successful year for the UAE insurer. Aman’s most recent company filings on their website showed that profits improved by 32 percent during the fourth quarter of 2010, with revenues surpassing AED157.9 million (US$43 million). The insurer was also the recipient of the World Finance award for the Best Takaful Provider for 2011, a fast growing business line which will surely prove integral to AMAN’s success going forward.
Outside of travel insurance and AMAN, the UAE insurance industry should continue its forward momentum throughout 2012. According to consulting firm Alpen Capital, the UAE insurance sector is expected to grow by 19 percent annually over the next 5 years. The emirate already boasts the most developed financial market in the GCC, with insurance penetration and density levels far above their regional peers. Further economic development and population growth is only expected to improve upon this trend. The UAE has been heralded for opening up its insurance and financial systems to greater foreign participation in recent years. This has worked to reduce the presence of entrenched national insurance companies and has brought more foreign expertise into the market. Another key factor driving the expansion of the insurance industry will be the UAE government’s massive infrastructure projects, which were previously stalled or cancelled in the aftermath of the 2008 global economic crisis. Many of these projects are now underway again, principally those in tourism and hospitality, and their success could boost the local economy and further UAE insurance sales along with it.
Insurance Companies Mentioned
AMAN
Dubai Islamic Insurance & Reinsurance Company (AMAN) was founded in 2002 as a national public shareholders company focused on Islamic insurance in the UAE. Aman’s founding members included the Dubai Islamic Bank and The Dubai Group among other shareholders. The Company offers general insurance products, including engineering, general accident, fire, marine, and motor insurance products. Aman can also provide life and health takaful insurance products for individuals, groups, and corporate clients, as well as healthcare insurance products, investment securities and property services.
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