20-05-2025
UAE: Higher premiums, no rains benefit insurance sector as profits jump to 24%
The UAE insurers' net profit increased by Dh190 million or 24 per cent to Dh987 million in the first quarter of 2025 compared to Dh797 million in the same period last year, due to increased premiums and the absence of heavy rains, which hit the country early last year, according to Badri Management Consultancy.
"The first quarter of 2025 has remained bright and sunny for the UAE insurance industry. There was an absence of rains, which impacted profits slightly in the first quarter and heavily in the second quarter of 2024," said Hatim Maskawala, managing director at Badri Management Consultancy
The UAE recorded heavy rains in the second week of March last year as the country recorded about 6 months of rain over two days, prompting work from home and remote learning due to flooding. This impacted the insurers as businesses and the automobile sector were hit during the heavy downpour.
Following record rains last year, the UAE insurers raised motor premiums to combat the rising costs of damages. It is estimated that around 100,000 vehicles were damaged during the record rains in March and April.
"The absence of rains coupled with rising premium rates has led to insurance revenue growing by 21 per cent in the first three months of 2025, reaching Dh11.9 billion versus Dh9.8 billion in the same period last year," he said.
Maskawala added that the growth is expected to continue, driven by rising premiums both for motor and medical, the key lines impacting the net.
Data showed that insurance service results for the analysed listed companies experienced a 70 per cent increase from Dh447 million to Dh762 million. The leading five companies recorded a 43 per cent increase collectively, moving from Dh440 million to Dh629 million during the same period last year.
"The increasing concentration of revenue and profit among leading companies reflects a changing market dynamic, where scale and efficiency are key to sustainability and expansion. Going forward, the industry must align premium growth with stronger underwriting and better claims controls to maintain long-term profitability," added Maskawala.
CBUAE's regulatory actions have been key in enhancing market discipline and curbing the sale of underpriced policies by financially weak insurers. Still, the industry must stay alert to increasing reinsurance costs and the lagging financial effects tied to some treaty arrangements.
