S&P's assessment highlights that the UAE’s Takaful sector, despite facing challenges, is showing robust growth, particularly in property, casualty, and health insurance segments. The rise in car insurance premiums and higher interest rates have contributed to increased revenues, with listed Takaful companies expected to see significant financial gains. The top five Takaful companies, which have seen notable profitability, are leading this growth, representing a significant portion of the market.
A trend of mergers and acquisitions has been observed within the Takaful sector, which has nearly halved the number of listed Takaful companies over the past two years. This consolidation is expected to continue as smaller firms seek to mitigate costs and compete more effectively in a crowded market. Experts believe that this consolidation will create a more competitive environment, ultimately benefiting consumers through enhanced services and more stable pricing.
The UAE's regulatory environment has played a crucial role in supporting the sector's growth. The adoption of International Financial Reporting Standards (IFRS) by both traditional and Islamic insurance companies has bolstered investor confidence and ensured greater transparency in financial reporting. The implementation of the new IFRS 17 standards in 2023 further aligns the UAE's insurance practices with global benchmarks, positioning the market as a regional leader in governance and compliance.
Market analysts also note that the ongoing expansion of health insurance coverage, along with the introduction of innovative insurance products, is likely to fuel further growth in the Takaful sector. The sector's ability to adapt to changing consumer demands and regulatory requirements will be key to sustaining its upward trajectory.
As the UAE continues to diversify its economy and strengthen its financial markets, the Takaful sector is set to play an increasingly important role in the broader insurance landscape. The anticipated 20% growth in 2024 underscores the sector's potential and its critical contribution to the UAE’s economic development.
The Takaful industry’s resilience amid global economic uncertainties and its alignment with international standards are expected to attract further investments, enhancing the UAE's position as a hub for Islamic finance in the region.
As the market consolidates and matures, the UAE’s Takaful sector is well-positioned to continue its strong performance, offering investors and policyholders a stable and profitable environment.
This growth reflects the UAE’s commitment to fostering a dynamic and competitive financial services sector, underpinned by robust regulatory frameworks and a strategic focus on long-term economic sustainability.