Abu Dhabi, UAEWednesday 21 August 2019

Noor Takaful eyes 12% premiums growth amid mandatory medical insurance expansion

Health insurance is already mandatory in Abu Dhabi, Al Ain and Dubai

Rajesh Sethi, chief executive of Noor Takaful, hopes to more than double the growth of premiums next year. Satish Kumar / The National
Rajesh Sethi, chief executive of Noor Takaful, hopes to more than double the growth of premiums next year. Satish Kumar / The National

Noor Takaful, a Dubai-based Sharia-compliant insurer, expects to more than double the growth of its underwriting premiums next year, as some of the emirates in the UAE consider implementing mandatory health insurance.

The Emirates "are already looking at some of the products, at least the greenfield work has started”, Rajesh Sethi, chief executive of Noor Takaful, told The National in an interview. “It is very firmly on the horizon and we expect opportunity when that happens,” he added without putting a timeline as to when that could happen.

Health insurance is mandatory in Abu Dhabi, Al Ain and Dubai and other emirates are working to implement the same. Beyond 2019, Mr Sethi expects another boost to business in its real estate segment when 10-year visas for investors are introduced in the country.

Noor Takaful is part of Noor Investment Group that also owns Sharia-compliant lender Noor Bank. Out of the 62 insurance companies that existed at the end of 2017, there are 12 Takaful companies, all of which are national insurers, according to the latest Insurance Authority figures. Unlike conventional insurance, Takaful, which means solidarity in Arabic, is a form of co-operative insurance that complies with Islamic laws or Sharia. The concept of Takaful is based on shared contributions and mutual cooperation between the participants to compensate one another in case of loss.

The UAE's insurance market is growing, although 62 insurers compete in a country of some 9 million population

In 2017, the UAE's gross written premiums rose 12 per cent year-on-year to Dh44.8 billion, higher than 2016's 8.3 per cent growth, according to figures from the Insurance Authority. Nearly Dh19.4 billion of those premiums were in the healthcare sector, a 13 per cent increase from a year earlier.


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Noor Takaful, which achieved less than 5 per cent growth in premiums this year from a year earlier, expects to end 2018 with Dh525 million to Dh550m in total premiums. In 2019, it expects premiums to grow between 10 and 12 per cent, driven by business underwritten in the medical sector.

The industry over the last decade has grown and so has the pricing, which means better margins for insurers in the country, he added.

Noor Takaful's insurance business is split 20 per cent general insurance and 80 per cent life and medical insurance. Within the latter, the life insurance segment accounted for about 30 per cent and medical insurance for 50 per cent.

Generating profits through investments is not a big part of Noor Takaful’s business plan. Its core focus is on underwriting and that is where the company can deliver value and improve its bottom line.

Insurers in the UAE felt the heat a decade ago during the financial crisis when their investments in the stock markets posted steep losses. The markets have since recovered but many insurance companies have remodelled their businesses with a focus on underwriting and generating profit through premium growth.

Despite a softer economy, on the back of the lower oil prices and a weak property market, the company remains committed to the UAE and has no immediate plans to expand its footprint in the Arabian Gulf.

“There’s enough opportunity of growth here," he said, adding that organic growth is the way forward for the company and it is not seeking any merger or acquisition opportunities.

The company has cut costs over the years. However, these measures have yet to bear fruit as gains are offset by its investments into technology and product improvements.

"We are investing heavily in technology. But it’s an investment we expect will yield results going forward,” he said.

Updated: December 22, 2018 05:30 PM