Lloyd’s forecasts 20% year-on-year growth for its insurance premiums in Dubai, a major Middle Eastern financial hub.
Gross written premiums from Lloyd’s Middle East and North Africa (MENA) headquarters in Dubai are expected to reach US$115 million by end-2018, a 20% increase from US$95 million for 2017, according to Lloyd’s chief commercial officer Vincent Vandendael.
“This is steady, steady growth,” Vandendael told The National, adding that the figures are larger when taking into context all of the Lloyd’s hubs – London, Dubai, and Singapore – that service the region.
The UAE continues to be the largest insurance market in MENA, with US$216 million of premiums in 2016, followed by Saudi Arabia with US$135 million, and Bahrain at US$54 million.
Vandendael said that the emerging renewable energy sector, which is expected to meet 27% of the UAE’s energy needs by 2021, and the leisure and entertainment sector, will drive the growth of insurance in the region.
“If the renewables sector grows as planned, people are definitely going to want to insure their solar panels and wind turbines, and a new entertainment industry [in Saudi Arabia] will require cancellation, ticketing insurance, and other types of cover,” he said.
Other sectors expected to contribute to growth are the engineering, construction and real estate, marine cargo and hull, as well as specialist areas of insurance such as cybersecurity, political and terrorism risk, bonds and trade credit.
However, growth prospects of takaful, or Islamic insurance, are expected to be quite muted.
Cameron Murray, head for MENA at Lloyd’s, said up to 10 Lloyd’s syndicates are working towards sharia compliance, with one, Atrium Underwriters, expecting to complete the process by 2018.
Sharia scholars currently do not mandate Islamic businesses to use takaful exclusively, leading to lukewarm reception to the products.
“It’s is not a thing that’s suddenly going to explode,” Murray said. “It’s a complement to the conventional offering we have. If we want to be relevant to customers and businesses in this region we should provide this product as an option.”
Vandandael added that markets place more importance on price than sharia compliance.
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