For an undisclosed sum, Oman Insurance purchased the UAE life insurance portfolio of Italian insurer Assicurazioni Generali.
Oman Insurance said in a statement on Monday that the transfer, which covers unit-linked life insurance policies, is expected to be completed by the end of August 2022, subject to regulatory clearances.
Generali’s ambition to rationalize its business model in the UAE by developing its network of partnerships is reflected in this deal.
“This deal bolsters our market position by bringing our total individual life assets under administration to more than Dh1.2 billion,” said Emmanuel Deschamps, Oman Insurance’s executive committee member and head of life insurance.
“It also aligns with our aim to accelerate the expansion of our life portfolio and establish ourselves as the regional life insurance authority.”
During the Covid-19 pandemic, a push to speed up the country’s digital transition is reinforcing the necessity of size among insurers, whose revenues are being squeezed by the slowdown.
The UAE Insurance Authority will release regulations to streamline life and family takaful insurance in October 2020. Analysts predicted at the time that this ruling would foster consolidation in the UAE insurance business.
The Insurance Authority set a limit on the total commission that can be paid over the life of a policy. Financial advisers must also offer a 30-day free-look period in the policy and provide customers with the option to terminate it.
Furthermore, the regulatory body has enhanced financial advisers’ disclosure obligations, requiring them to provide customers with a benefit illustration before the policy begins and a policy statement every six months.
Generali clients’ insurance will stay unaltered following the acquisition, according to Oman Insurance.
According to the statement, all parties have agreed to facilitate a smooth transition for current policyholders and to continue providing them with access to insurance services and systems.
“Through bancassurance, life broker relationships, and our 150 consultants in our proprietary channel, we are capitalising on our strong digital capabilities and multi-channel approach,” Mr Deschamps added.
Oman Insurance’s solvency, at 275 percent as of December 2021, is among the highest in the UAE, according to the statement.
The UAE has long had a low life insurance penetration rate. According to Frederic De Melker, RAKBank’s managing director of personal banking, it was 0.67 percent in 2018.
The global average coverage for life insurance is 6.1 percent.
According to Mr De Melker, the UAE is significantly underserved in terms of life insurance because the vast majority of foreigners come from Asia, where penetration rates are even lower than in the UAE.
Poor awareness, lack of trust in the market, and the transient nature of expatriates are all factors contributing to the UAE’s low insurance penetration, he noted.
“In the United Arab Emirates, there are far too many insurance providers.” Scale becomes increasingly important as the market evolves and digital transformation occurs. During a webinar in 2020, RAKBank CEO Peter England stated, “This will lead to more consolidation among general players.”
In 2019, Generali withdrew its Vision and Choice contractual savings plans from the UAE market, which it offers to investors through financial advisers.
In addition, the business sold its whole stake in Generali Worldwide Insurance to the Guernsey-based Utmost Group.