Demand for life insurance products surge in Bahrain |
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Bahrain's life-insurance sector is witnessing a wider increase in interest, or double-digit growth, in life-insurance premiums than the value-of-life covers, according to studies from the Central Bank of Bahrain.
According to the Bahrain Insurance Report 2008, life-insurance premiums are set to increase by 13 per cent annually, reflecting rising demand and a growing population," said Nigel Watson, sales director at Nexus Group of Companies.
"United Arab Emirates life-insurance premiums are set to grow 18 per cent annually, reaching BD 6.4 billion within the next three years, the latest study claimed. A study confirmed a growing demand for life-insurance premiums as the increasingly sophisticated UAE mortgage markets adopts preferred global insurance practices to back mortgage applications."
"Mortgage lenders across mature markets in Europe, the USA and the Far East often view life-insurance payment and mortgage-protection cover as one of the primary securities to support mortgage application. The UAE mortgage market, currently valued at BD 2 billion, is estimated grow to BD 6.4 billion within the next three years alone.
The sales director said: "Mortgage-payment protection schemes offer short-term coverage of mortgage payments when a home owner is unexpectedly out of employment or requires assistance due to sudden illness or an unfortunate accident. It is important to understand that mortgage-payment protection does not cover the entire repayment of a mortgage loan."
As the UAE mortgage market matures, local and international insurance firms are beginning to offer several types of mortgage-payment protection schemes, and, according to recent data, 71 per cent of first-time buyers in the Emirates are now opting to use mortgages to finance their property purchases. "Most life-insurance policies are tailored to cover individual debts and repay the outstanding loan if the mortgage owner unfortunately dies.
"The cover can ease the burden of mortgage payments or the possibility of the property being reclaimed, for dependents," said Watson. With life-insurance premiums responsible for 16 per cent of the overall insurance market in the UAE, mortgage and financial advisors are stressing the need for deeper market penetration of life-insurance covers to secure home loans, financial debts and offer financial security to dependents in cases of tragedies.
"We have witnessed an increase over the past 18 months in both the demand of and the value of life-insurance premiums, primarily from mortgage owners," added the sales director. Independent research from industry analysts shows a 37 per cent increase for life-insurance premiums in both dirham and US dollar terms two years ago and forecast an 18 per cent annual growth until 2011. "In the UAE, we believe high demands and an increase in values for individual life insurance will reach six-figure digit records," added Watson. For the Emirates, new research from Swiss Re shows that large-scale expansion in life-insurance value is estimated to grow from $386 million two years ago to $676 million by 2010.
© Bahrain Tribune 2008
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