UAE Insurance Surges: Profit Rebound Post Rain

Strong Profit Growth in H1 2025 After 2024 Rains

The extraordinary rains that occurred in April 2024 posed huge challenges for the insurance sector in the United Arab Emirates. Losses from vehicle and property damages amounted to billions of dirhams, seriously testing the financial stability of insurance companies. Despite all this, the sector bounced back vigorously: in the first half of 2025, net profit increased by 52%, amounting to 2 billion dirhams, according to a report by Badri Management Consultancy.

Engines of Recovery: Price Increases and Risk-Based Pricing

One of the main drivers behind the recovery was a sustained increase in insurance premiums and wider application of risk-based pricing. Industry revenues rose by 19%, reaching 24.2 billion dirhams compared to 20.3 billion dirhams in the same period last year. Growth was particularly noticeable in the motor and health insurance sectors, where demand remained steady as underpriced policies were gradually pushed out of the market.

In response to the 2024 rains, insurers were forced to implement significant premium hikes to offset the losses incurred. The effects of these measures were already being felt at the beginning of 2025, not only in revenues but also in insurers' financial results.

Dominance of Major Players Strengthens

Market concentration also increased: the five leading insurance companies achieved an insurance service result of 1.3 billion dirhams, a 31% increase compared to the previous year. This trend underscores the importance of scale economies and operational efficiency in the UAE insurance market.

Size and efficiency are becoming increasingly crucial factors in competitiveness, especially in a market where regulatory pressure is also intensifying. Meeting solvency requirements has become crucial, and several companies have announced capital increases recently.

Key to Long-term Sustainability: Disciplined Underwriting and Efficient Claims Handling

The UAE Central Bank's heightened supervision, along with gradual premium increases, is expected to further improve technical margins and curtail underpriced insurance products. However, insurers remain cautious about the potential impact of rising reinsurance costs and delayed contract renewals.

For future stability, insurance companies need to strengthen underwriting discipline and claims handling practices. A growing portion of profits comes from the insurance service itself, thereby making operational efficiency and professional reliability crucial.

Positive Balance Despite Losses

While six out of 26 insurance companies recorded negative insurance results in the first half of 2025, five of them still ended up with a net profit, partly due to investment revenues. This indicates the increasing role of diversified income sources and effective financial management in the sector.

One such example is Union Insurance Company, which boosted its net profit by 76%, reaching 22.7 million dirhams. This was primarily due to its excellent underwriting performance, cost efficiency, and increased investment returns. Its insurance underwriting results rose by 93% compared to the previous year.

Their solvency level also improved significantly, reaching 170% in the first half of 2025, exceeding regulatory requirements.

ADNIC and Salama: Reliable Growth

The Abu Dhabi National Insurance Company (Adnic) also showed strong growth: they reported a pre-tax profit of 261.2 million dirhams, a 16.5% annual increase. Their gross premium income rose by 25.7% to 5.539 billion dirhams. This success is backed by strict cost management and forward-thinking innovation strategies, which enabled adaptation to the changing market environment.

The Dubai-listed Takaful provider, Salama, also wrapped up a strong quarter. The company's net profit was 8.25 million dirhams in the first half of the year, with the bulk coming from the second quarter (7.86 million dirhams). This is a significant increase compared to the same period last year. Takaful revenues slightly decreased, but profitability remained strong thanks to efficient operations.

Summary

Despite severe losses caused by unprecedented rains in 2024, the UAE insurance sector achieved strong profit growth in the first half of 2025. Premium increases, improved risk management, and a strengthening regulatory environment all contributed to stability. The market is consolidating, with larger players becoming increasingly dominant, while smaller companies can mitigate insurance losses through effective financial management and investments.

In the forthcoming period, insurers' biggest goals will be to maintain underwriting discipline, further improve claims processes, and respond to changes in the reinsurance market. The industry's future heavily depends on how well companies can sustain growth amidst market volatility and extreme weather conditions.

(Source: Based on a press release from Badri Management Consultancy.)