We came to think about how the car insurance sector in the UAE was affected by the financial crisis. First we started to research on the internet for articles mentioning how the industry was affected but could not find any. We therefore decided to economically analyze the situation given the current factors and reach a conclusion.
Everyone knows that car sales in the UAE have been hit hard by financial crisis due to low liquidity and lower consumer purchase power. Lower car sales mean lower car insurance sales, meaning that those companies customer base is not growing. Previous customers are now less willing to pay high premiums and are looking for lower premiums. Insurance companies are therefore forced to lower their premiums to provide incentives to their customers; this thereby is going to lower their profit margins.
Hence, has the insurance industry been hit by the financial crisis? Given the analysis mentioned above, yes we do think the industry has been hit and will continue to see doom and gloom until we see a turnaround in the economy.