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November 23, 2015updated 19 Sep 2022 11:15am

IIC distribution channel forecasts for UAE and Saudi Arabian life markets

Distribution channel forecasts for the UAE and Saudi Arabian life markets based on data from Timetric's Insurance Intelligence Center

By Ronan Mccaughey

UAE life insurance distribution forecasts

UAE

1. Life insurance in the UAE is primarily distributed through two channels: direct marketing and brokers. Other distribution channels used were agencies, bancassurance and e-commerce. Direct marketing was the leading distribution channel contributing 40.2% of the segment’s new gross written premium business in 2013 followed by brokers with a share of 39.2%

2. Gross written premiums collected through direct marketing increased from AED552.7m (US$150.5m) in 2009 to AED1.4bn in 2013

3. – The channel is projected to continue its growth generating new business at a CAGR of 16.8%, to value AED3bn in 2018

4. Brokers were the second-largest distribution channel in terms of the segment’s new business gross written premium at a CAGR of 25% between 2009-2013

5. In 2013, there were 168 registered insurance brokers operating in the UAE, of which 161 were domestic. The main brokers operating in the country include Aon Benfield, Howden, Insure Direct, Jardine Lloyd Thompson, Lockton, Marsh, Robert Fleming Insurance Brokers (RFIB Group), United Insurance Brokers, and Willis Re

6. Brokers are highly regulated by the Insurance Authority. Under the provisions of the regulator, unconditional bank guarantee or professional liability cover is mandatory for brokers. Minimum paid-up capital requirements for brokers have also increased

7. Increased capital and indemnity cover requirements are projected to considerably impact small brokers and the industry is expected to record more mergers and acquisitions activity among brokers by 2018.

Source: Timetric’s Insurance Intelligence Center

Saudi Arabian life insurance distribution channel forecasts

Saudi Arabian life insurance distribution channel forecasts

1. Agencies were the largest distribution channel for life insurance in Saudi Arabia, accounting for 43.2% of the total market commission in 2013.

2. A large client base, low-cost sales force and strong brand reputation made it a preferable distribution channel among Saudi life insurers. Locally licensed agents are authorised by the Saudi Arabian Monetary Agency (SAMA) and are required to meet minimum educational requirements as a condition of their licence

3. Bancassurance was the second-most-popular distribution channel and accounted for 32.2% of the total commission in 2013. The rise in bancassurance was mainly due to the large client base associated with banks, which makes it a popular distribution channel for insurers

4. Direct marketing was popular during 2009-2013 due to its cost-effective nature, with no intermediaries. The channel accounted for 19.5% of the total market commission in 2013.

5. The share of total market commission for insurance brokers increased from 4.8% in 2009 to 5.1% in 2013, and is expected to reach 5.2% by 2018.

6. International brokers are well represented in Saudi Arabia and maintain close relationships with insurance companies. Aon has over 300 qualified professionals based in Saudi Arabia, offering insurance, reinsurance brokerage and risk management services. Other prominent brokers operating in the country include Marsh, ACE, UIB and Al Mamoon

7. Life insurers in Saudi Arabia tend to use traditional channels such as agencies and bancassurance, with new cost-competitive channels such as e-commerce yet to emerge.

Source: Timetric’s Insurance Intelligence Center

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