New regulations to spur growth of life insurance in UAE
Covid-19 may prove to be a catalyst for changing attitudes toward life insurance among expats and nationals in the UAE
New regulations in the UAE’s insurance landscape have helped to provide greater transparency for consumers, which will ultimately lead to greater penetration regarding life insurance, experts said during a webinar on Sunday.
National Bank of Ras Al Khaimah’s (RAKBANK) ‘Life Insurance Comes of Age in the UAE’ virtual conference highlighted how the penetration rate of life insurance in the UAE currently stands at 0.7 per cent, compared to a global average of 6.1 per cent. For the situation to change, the landscape will have to evolve to become more customer-focused, officials noted. Progress is already being made with new regulations under the UAE Insurance Authorities’ Board of Directors Decision 49 (BOD 49) of 2019, which are designed to make the new life insurance policies more transparent, while making insurance companies more accountable and responsible.
“We have seen some significant changes in the industry, especially regarding the new regulations,” said Peter England, CEO of RAKBANK. “There is a thought process among most of the population that life insurance is not that important, however, life insurance is a crucial part of our planning for the future. It is not surprising that a large number of people globally are thinking very seriously about life insurance given the times. Google searches for the term ‘life insurance’ jumped by over 50 per cent recently.”
England revealed that with the high number of expats in the UAE, there is a ‘big savings element’, where many people feel like their savings are enough and that there is no need for them to pay for life insurance. “Many workers save money regularly to send it back home to their families.”
Frederic de Melker, MD of Personal Banking at RAKBANK, said that with the Covid-19 pandemic, individuals are not only looking for their own wellbeing, but also those of their families.
“People do recognise the need to protect themselves and their families,” he said. “But, there is a large disconnect between knowing what is necessary and knowing where to go to put that cover in place. Therefore, it is important that partnerships like RAKBANK and MetLife provide a strong and suitable framework of expertise and advice to guide the customer to get a sufficient level of cover.”
He added that for many expats, that were already aware about the importance of life coverage, until the recent changes, all sorts of financial products were treated with a certain suspicion. “We have all heard one tale too many from friends and family about being misled regarding pension plans or schemes by aggressive salesmen. This is one of the reasons why we welcome the new regulations that ensure transparency. The digital revolution, in addition to the Covid-19 pandemic, is also changing the attitudes and preferences of how consumers want to purchase goods and services. People want to plan for what will happen if they are affected.”
Similarly, Dimitris Mazarakis, MetLife Gulf CEO, said that the pandemic is going to accelerate changes in the industry, as far as digital transformation and customer habits are concerned. “In the short term, these regulations might create challenges in some market players, but based on the international experience, these are going to be for the short term only and the market will adjust quickly. The new regulations will protect the customer and support the growth of the life insurance market. Assuming the positive outlook of the UAE market, if we want to improve insurance penetration, we have to invest in creating awareness, and building trust, and improving the availability of our products. It is also critical for insurance providers to become more efficient when providing value for the customer.”
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