Smaller insurers face difficulties
While the UAE’s largest insurers have benefited from stronger capital positions and pricing adjustments, smaller insurers are finding it harder to absorb rising costs.
Alpen Capital says stricter solvency rules, increased investment in technology and competitive pricing are putting pressure on margins, which could lead to more mergers as weaker players struggle to remain profitable.
“High operating costs combined with a strengthened regulatory environment are making it increasingly difficult for weaker players to maintain the same level of growth and profitability,” the report says, adding that this will likely lead to further consolidation across the market.
Digital insurers are changing the market
Another big change is happening online.
Digital insurers and comparison platforms are changing the way insurance is bought and priced in the UAE, using artificial intelligence, automation and big data to speed up claims and offer more personalized pricing.
But not everyone can keep up.
“The ongoing war in the Middle East has triggered wide-ranging economic and insurance market disruptions,” Lutfi said in the report, warning that insurers face “higher default rates” and greater financial pressure in a volatile risk environment. He added: “In this volatile landscape, insurers with advanced, digitalized pricing capabilities are best positioned to respond quickly and manage evolving risk exposures in real time.”
That digital race is becoming another challenge for smaller insurers, which may struggle to finance costly technology upgrades while meeting stricter capital requirements.
“Market fragmentation is another issue, particularly in the UAE, where a large number of insurers operate, leading to intense competition and pricing pressures,” said Sunil Kohli, CEO of Dhofar Insurance Company SAOG.
Growth story, but with a warning
The UAE remains one of the GCC’s largest insurance markets, accounting for almost 40 per cent of the region’s gross written premiums in 2024 and benefiting from population growth, mandatory insurance schemes and economic expansion.
“Over the next five years, the region’s insurable asset base is expected to increase significantly with the planned completion of large-scale infrastructure projects, benefiting the non-life segment,” said TM Lakshmanan, CEO of Alpen Capital.
But Alpen Capital says the sector’s growth story comes with a clear warning: Consumers could eventually feel rising costs, fierce competition and a widening gap between large and small insurers through higher premiums and fewer options in the market.
“The region is also witnessing increased demand for risk-related insurance products due to natural calamities and unstable geopolitical conditions. Although the sector is maturing, insurance penetration rates across the region remain below international standards, highlighting significant scope for growth,” Lakshmanan said.
Dhanusha is Chief Reporter at Gulf News in Dubai and has a keen eye on UAE regional and global aviation. Delve into how airlines and airports operate, expand, and adopt the latest technology. Known for her keen eye for detail, Dhanusha makes complex topics such as new aircraft, evolving travel trends and aviation regulations easy to understand. Lately she has been especially fascinated by the world of eVTOLs and flying cars. With almost two decades in journalism, Dhanusha covered a wide range, from health and education to the pandemic, local transportation and technology. When she’s not following what’s happening in the skies, she likes to explore social media trends, technological innovations, and anything that piques the reader’s curiosity. Outside of work, you’ll find her immersed in electronic dance music, pop culture, film, and video games.