Employment

Zurich Middle East plots growth on needs of expats

November 3, 2023, 7:52 AM

Breast cancer screening at a UAE hospital. An increasing amount of retiring expats in the region are in need of health insurance

Swiss insurer expanding in region
Growing amount of expat retirees
Demand for pensions and health cover

Zurich International Life, the Middle East division of Switzerland’s Zurich Insurance Group, is expanding its core business in response to rising demand from expatriates.

With expats staying in the region for longer, there is a growing need for products and services such as life insurance, workplace savings plans and critical illness cover.

There is also emerging demand for health insurance among older expats hoping to retire in the region, at which point they will no longer benefit from the mandatory health cover provided by their employers, Zurich Middle East general manager Wilson Varghese told AGBI.

He forecasts “high single digit growth” in annual revenues for Zurich Middle East in the years ahead.

“We see very strong growth in the region, especially in employee benefits and workplace savings, which have gained a lot more traction with employers lately on the back of government reforms and legislation,” he said.

In September, the UAE government unveiled an alternative to the longstanding practice of companies awarding end-of-service gratuities to staff when they leave – a lump sum based on their salary and length of service.

Instead, the government is promoting take-up of “in-service” workplace pension and savings plans.

The initiative is a non-mandatory expansion of free zone Dubai International Financial Centre’s DEWS (DIFC Employee Workplace Savings) programme for its 5,000 registered companies. The scheme was set up in 2020 and Zurich Middle East won the contract to administer it with wealth manager Equiom.

From this year, said Varghese, Zurich has been administering an expanded version of DEWS to 65 Dubai government entities, increasing the company’s returns from the scheme.

Zurich’s assets under management (AUM) from DEWS stand at around $500 million, of a total $5 billion across its corporate and retail, pension and workplace savings businesses, Varghese added.

A report by Redseer Consulting in August put the potential value of the market at more than $100 billion in the UAE alone, presenting opportunities for wealth managers, pension funds and insurers

Expats are staying in the country for longer – a decade ago the average was two to three years. Now it is nine to 10 years, Redseer said.

Upwards of 90 percent of Zurich’s regional business comes from expats as opposed to national citizens, many of whom are offered sharia-compliant insurance from their employers.

The life insurance part of Zurich’s business represents the bulk of regional AUM – around $60 billion – but is a lower-growing segment, Varghese noted.

“Culturally in the Middle East, insurance is something that is looked at differently. Obviously there’s the sharia-compliant element that needs to be there. And because governments typically look after their citizens with welfare programmes and other financial support, the need for life insurance is not as acute,” he said.

Insurers’ profitability declined in most Gulf countries last year due to increased claims and rising regulatory costs, S&P Global Ratings said in March.