New regulations requiring greater involvement by actuaries in the pricing of insurance premiums will bring greater stability to the sector, according to Tariq Zietoun, Abu Dhabi National Insurance Company’s chief officer for underwriting.
The UAE’s Insurance Authority last month discussed new requirements that actuaries have greater involvement in the calculation of insurance premiums, effectively mandating that premiums be set according to risk rather than competitive pricing concerns.
Such a move was introduced for Saudi insurers by the Saudi Arabian Monetary Agency in early 2013, after extreme price competition among the kingdom’s insurers weighed heavily on bottom lines.
“We expect insurance sector results to improve going forward thanks to regulatory initiatives with regard to [financial] solvency and the requirement for actuarial services to be used for pricing mechanisms,” Mr Zietoun said.
The Insurance Authority last year introduced regulations obliging insurers to have independent actuarial reviews of their technical reserves, providing for greater financial stability for insurer’s balance sheets.
Adnic this month announced a profit of Dh39 million for the three months to the end of March, its best quarterly profit since mid-2014, following an increase in premiums during 2015.
“We were one of the first companies to take initiative to correct pricing of premiums, especially in the medical and motor space,” said Mr Zietoun.
“Since we took action we’ve seen many other reputable players following in our footsteps.”
Adnic’s shares were unchanged on Wednesday at Dh2.64. The stock, among the least liquid on the Abu Dhabi stock exchange, has lost 8.33 per cent of its value since the start of the year.