UAE – Mergers to help Takaful overcome challenges
Thursday, 05 11 2017, Category: Insurance and Reinsurance, Country: U.A.E
The Takaful sector in the country achieved adequate growth rates in the past few years. It took advantage of government projects and initiatives as well as the insurance sector’s revival that followed the instructions of the Insurance Authority to raise the prices of motor insurance.
Moreover, compulsory health insurance was introduced, so the insurance sector growth by 15% on an annual basis. However, the sector still faces many challenges such as the high operating costs, the lack of innovation in differentiating products from traditional ones as well as the limited share local insurance premiums.
Despite this strong growth many companies have difficulties in achieving profits and some companies lost more than half of their capitals especially the new companies due to underpricing practiced by many companies in addition to a congested market that has more than 61 insurance companies.
Among the most important solutions to strengthen the role of Takaful companies is to encourage mergers and acquisitions among companies in order to build large Takaful companies, which can compete locally and globally.
Source: Al Bayan - UAE