With two-thirds UAE insurers looking to leverage tech, insurtech is on a rising tide
With tech-powered solutions gaining worldwide attention, the GCC region is witnessing a surge in insurtech adoption. The UAE is emerging as a leader in the region.
The insurtech sector is thriving in the Middle East and North Africa (MENA) region, especially in the Gulf Cooperation Council (GCC). As per a report by Mordor Intelligence, the insurtech market in the region is expected to grow at a CAGR of over 6% between 2019 and 2028.
An estimated 67% of UAE-based insurers are interested in partnering with insurtech platforms, as per Future Market Insights data. Additionally, over 60% of traditional insurance operators want to work with large-scale technology solutions.
Mohit Shrivastava, Chief Analyst—ICT, Future Market Insights tells YS Gulf Edition that for many insurtech startups the growth is fueled by leveraging technologies such as artificial intelligence (AI) and the Internet of Things (IoT) for transparency, accessibility, and simplicity.
The insurance-as-a-service technology base helps people to make better financial decisions and access a wide range of information—from insurance products to bank accounts, loans, and credit cards, he points out.
“These solutions help improve customer experience, reduce administrative costs, and optimise the profitability of their insurance portfolio,” he says.
Conventional insurance value chain
One of the driving factors for the growth is gaps in the conventional insurance value chain.
In the report ‘MENA Insurtech: Ripe for the Taking’, Akshay Jayaprakasan, Associate Partner at RedSeer, highlighted that managing existing policies, poor product breakdown, and friction in comparing services across providers were the key existing gaps.
The sector is also affected by low penetration, especially in segments such as life insurance and non-motor insurance, and the lack of insurance access for certain population groups, according to Nameer Khan, Founder and Chairman of MENA Fintech Association.
“Allowing consumers to research suitable policies and compare properly, and close the process in a simplified and streamlined manner online can help,” says Akshay.
Some Middle Eastern players like Adnic, Bupa Arabia, Tawunifa, Wafa Insurance, and Abu Dhabi National Insurance have implemented digital transformation in insurance and are also working to expand their digital strategies.
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Digital maturity and government push
With more people seeking insurance policies, the demand for tech solutions spiked during the pandemic. While the major credit for insurtech adoption can be attributed to this increasing digital maturity in the region, there are other factors at play as well.
“Success stories from markets such as India and Southeast Asia have driven investor interest in the sector, especially post-COVID-19. It has also increased attention towards medical and life policies,” Akshay says.
Nameer attributes the growing awareness to increasing disposable income and the rise in the number of small and medium-sized enterprises.
In the GCC, UAE is emerging as a leader in the insurtech market due to digital maturity, a price-driven mindset, and an interest towards collaborating with insurtechs. A report from Mordor Intelligence ranks Dubai eighth in the Global Financial Centres Index (GFCI), and is placed as one of the top ten fintech hubs.
Additionally, GCC governments have shown significant interest towards financial inclusion. Mohit attributes this to the region’s interest in economic growth and equity.
He says, “Government financial inclusion schemes are increasingly promoting the benefits of basic access to financial services for economic growth across GCC countries. The fintech sector is leading the charge in response with various innovations such as mobile banking, e-wallets, digital payments, peer-to-peer transfers, and international remittances.”
Scope for growth
Overall, insurtech is still budding in the GCC region and leaves significant space for growth. The Redseer report suggests that customer satisfaction with the quality and accessibility of insurtech solutions remains low.
“Insurtech penetration is at 1%-2% of GWP,” notes Akshay, adding that legacy players view significant value in insurtech as an extension to their digital offering and consider it as the most viable “lead generation tool”.
What lies ahead is the need for existing players to work on simplifying and digitising their offerings for customers. “Eliminating all offline interventions and bureaucracies that prolongate the process of policy acquisition and claims submission would improve satisfaction,” he asserts.
A distributed infrastructure, advanced process automation and virtualisation, trust architecture, the scope for the future of connectivity and applied artificial intelligence in insurtech can help it transform, Mohit adds.
He concludes, “The future of insurance is about streamlined efficiencies, quick access to quotes, easy access to claims filing, and so much more—from embedded insurance options to simple insurance quote portals that allow you to compare hundreds of policies in minutes.
Edited by Kanishk Singh