A Quick Overview of the Business Model Followed by Insurance Companies in Dubai

by afia insurance Insurance Advisor

Before you should subscribe to an insurance company, it is essential for you to understand the way, in which any insurance company and its professionals perform their functions. To help you understand the complete process easily, we have shared a common business model followed by most of the insurance companies in Dubai. Accordingly, the model contains three major components, which include investing and underwriting procedure, claims and marketing/promotion.

Underwriting and investment

In the case of underwriting and investment activities, the business model of various insurance companies in Dubai bring a huge premium value together and income from the investment as compared to the value expenses in losses.

Simultaneously, they opt to present an affordable price acceptable among clients. Earnings of insurance companies consist of investment income and earned premium amount while deducting the underwriting expenses as well as incurred loss from it.

Detailed Explanation of the Methods Involved

Insurance companies in Dubai often gain a massive amount of wealth based on two different methods, which include the following-

· Underwriting refers to the process followed by any insurance company or its agents to choose the insured risk and selects the value of the premium amount to charge in case of accepting the respective risks.

· In case of investing, companies invest in the values, which they receive on premium amounts.

Besides this, it is essential for you to check the severity and frequency of insured liabilities and the estimated average of payment to go with rate making at the simplest possible level. For this, insurance companies in Dubai opt to check the available historical data related to loss they suffered and update about on the present values. In this way, they compare it with earned premiums for assessment of rate adequacy. Along with this, in some cases, companies use the ratio of expense load and loss. In simple words, companies rate various risks characteristics based on comparing the losses with their loss relativities.