The prices of these insurance documents mainly depend on local factors such as the cost of medical claims, car accidents, regulatory legislation, and the level of competition among insurance companies in the market. Therefore, any impact felt by consumers is usually an indirect one, through an increase in some transportation costs or the prices of some goods related to global trade, and not through a direct increase in personal insurance premiums». He also confirmed that «in general, the insurance sector in the United Arab Emirates enjoys a high degree of regulation and financial solvency, and the market relies on strong networks of global reinsurance, which helps to absorb shocks and deal with such conditions without significant impact on consumers in the short term. It can be said that the citizen or resident will not feel a direct impact on their health or car insurance because of these events, while the impact, if it occurs indirectly, may appear through transportation costs or global trade, which ultimately depends on the extent of the development of the situation in the region and its continuation».
Shipping Movement
On his part, the Vice President and Legal Managing Director for the Gulf region at «MetLife Insurance», Mohamed Abdouna, said that «the impact on the prices of some types of insurance as a result of regional events is mostly related to shipping and navigation movements regionally and globally, and the various risks arising from geopolitical and security tensions». He added: «Although it is expected that prices will be affected significantly in insurance for transport and navigation, as well as for war risks and business interruption, the probability is low that this price impact will also extend to life insurance, health insurance, and car insurance, especially the documents that include coverage for war risks and their effects, especially in the case of a prolonged period of tension or escalation».
Abdouna continued that «the impact on prices and their increase is closely related to underwriting activities and reinsurance prices, which are determined by the nature of the risks, which are determined by global reinsurance companies according to international actuarial standards that balance between the size of the risk and the probability of its occurrence». He said: «Most likely, there will be no direct impact on insurance prices at the individual level in the UAE, considering that regional events do not affect the high and distinctive levels of confidence in the different ratings of the country in terms of security and stability, on the other hand, the various regulatory authorities in the country, headed by the Central Bank of the UAE, as the main regulatory authority for the insurance sector in the country, continuously supervises the insurance sector and regulates its activities, which guarantees protection and balance, and no impact on the stability of insurance prices».
This could lead to an increase in the cost of insurance for maritime or air cargo operations, which could indirectly affect the economy through increased shipping, transportation, and international trade costs. In cases of conflicts or an increase in the level of risks in some areas, global insurance and reinsurance markets reassess these risks, and additional premiums may be imposed on ships or aircraft passing through areas classified as high-risk or war zones.
Two experts in the insurance sector said that it is unlikely that the prices of the most common types of insurance at the local level, whether health insurance or car insurance, will increase due to the current tensions in the region, considering that the prices of these documents mainly depend on local factors such as the cost of medical claims, car accidents, regulatory legislation, and the level of competition, indicating that the insurance branches most affected will be marine insurance, cargo, and aviation insurance.
They confirmed to «Emirates Today» that, in general, the insurance sector in the UAE enjoys a high degree of regulation and financial solvency, and the market relies on strong networks of global reinsurance, which helps to absorb shocks and deal with such conditions without significant impact on consumers in the short term.
Insurance Prices
In detail, insurance expert Bassem Jalmeiran said that «although it is too early to make a definitive judgment on the impact of the latest geopolitical events in the region on insurance prices, it is known that global insurance and reinsurance markets are always affected by the degree of geopolitical risks and the level of regional stability». He added: «Regarding the impact on the local insurance sector, and thus on the citizen or resident in the UAE, it remains mostly limited, especially regarding the most common types of insurance such as health insurance and car insurance. Therefore, regional events usually do not reflect on them directly or immediately». Jalmeiran continued: «But at the same time, there are some insurance branches that are more affected by geopolitical tensions, especially marine insurance and aviation insurance, as well as energy and international transport insurance».
