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The UAE is one of the largest insurance markets in the Gulf region, and Dubai takes an impressive share of the country’s total premiums. There is still plenty of room for growth in life and general, with the period ahead likely to see more of this potential realised. More specifically, Dubai is moving toward compulsory health insurance, and there are signs that the infrastructure and real estate project pipeline is coming back to life. Demographics are also playing their part, as the emirate’s population swells and awareness of insurance needs grows; the population of the UAE grew by 5.6% in 2011 and is expected to keep increasing as the economy expands, creating a range of new opportunities for insurance companies. Moreover, legislative changes – particularly over health – will likely have a major impact when they are finally implemented, with some fierce future competition for the health segment widely expected.

With global Islamic financial assets worth some $1.2trn at the end of 2011 and growth of 150% over the previous five years, Dubai has long been eager to take a bigger share of this rapidly expanding market. Indeed, the emirate has long been home to some of the region’s stand-out Islamic banks and insurers, with its sukuk – Islamic bond – market also of highly prominent international standing. Broadly speaking, despite the troubles following the global financial crisis, the largest Islamic banks in Dubai have begun to post solid results. Assets and liabilities continue to improve. In 2012 Islamic banks saw annual growth rates for deposits of around 15%, compared to 5% for conventional banking in the region. The financial picture for Dubai’s takaful companies is one of narrow margins and opportunities for future consolidation, as with the insurance sector. This chapter includes an interview with Adnan Chilwan, Deputy CEO, Dubai Islamic Bank.

Since the global crisis in 2008-09, when Dubai’s indexes plummeted and international interest waned, there has been much recovery, and certain sections – such as the commodities and precious metals segments – have boomed. The lessons learnt in this financial test have left the emirate’s exchanges and players stronger, with the fundamentals of this vibrant economy returning to bring on a second wave of market activity. Recent times have been characterised by cautious recovery in Dubai’s equity markets, and debt and commodities have continued to do well. The renewed activity on the emirate’s sovereign bond market is likely to be given another boost by the realisation of plans to issue the UAE’s first federal bonds. The market is also benefitting from a global surge in demand for Islamic debt instruments, while encouraging small and medium-sized enterprises (SMEs) to list is hoped to broaden and deepen the capital markets.

After facing some tough challenges in recent years, Dubai’s banking sector now shows signs of having turned the corner. Stronger regulation and more robust financials are providing a healthier environment for expansion, and significant progress has been made in tackling the legacy of the global financial crisis. In the year ahead banks are likely to remain conservative in their strategies, managing margins carefully in a tight environment. Regulatory changes should help to boost transparency and prevent unbudgeted risks. It is also widely expected that the banking sector will attract more Asian banks, as Chinese lenders are showing particular interest, especially firms with significant investments in Africa. The chapter includes an interview with Rick Pudner, CEO, Emirates NBD.

After weathering the effects of the global financial crisis, Dubai is swinging back toward a more guarded optimism as it regains its status among regional and international economies. In 2012 GDP was expected to reach $386bn, and the IMF estimates that GDP will continue growing, reaching $450bn in 2017. However, Dubai’s economy is currently operating at about 15% of capacity, implying that economic gains can be made by increasing efficiency and productivity. While the emirate still faces challenges relating to its exposure to regional and global volatility, efforts to strengthen the regulatory framework and improve oversight of GREs should help it to better withstand future turmoil in the global economy. This chapter includes interviews with Ahmad bin Byat, CEO, Dubai Holding; Abdulaziz Al Ghurair, Chairman, Al Ghurair Group; Hamad Buamim, Director-General, Dubai Chamber of Commerce and Industry; and Anand Sharma, Indian Minister of Commerce & Industry.