Kuwait’s insurance sector is one in which much needs to change if the country is to shake its status as

something of a backwater. As BMI’s discussion on the economic and political outlook makes clear,

progress towards economic reform and liberalisation continues at a slow pace, at a time when inwards

investment has been constrained by a challenging political environment. This is evidently not a market in

which foreign insurers have felt the need for a lowering of barriers to entry.

Nor is it clear that there would be much opportunity for them if they did. The larger listed Kuwaiti

insurance companies have published their results for the nine months to the end of 2009. We continue to

look for overall growth in premiums last year of around 5%. Virtually all of the absolute growth in premiums
was accounted for by market leader Gulf Insurance. Al Ahleia Insurance reported a

significant decline in both gross and net premiums and total assets. As a result of our methodology –

which assumes a steady increase in non-life penetration (i.e. premiums as a percentage of GDP), we are

currently looking for accelerating in growth from 2010. However, we recognise that we may yet have to

lower our forecasts. Other than those mentioned, the main operators in Kuwait are, similarly, locally

owned and listed organisations that are small by anything other than local standards. Examples include

Kuwait Insurance, Kuwait Re, Warba Insurance, Wethaq Takaful and First Takaful.

As is the case in several other Middle Eastern countries, the level of development of the life segment is

embryonic. This may be because the government makes extensive social security benefits available to its

citizens and it is not clear what will be a catalyst for this to change.

In this report, we also continue to provide a breakdown of the insurance sector by line – from the point of

view of the regulator or trade association. In Kuwait, comprehensive motor insurance (presumably

compulsory motor third party liability) was the largest line in the non-life segment, accounting for just

under half of gross written premiums. Other major lines included life and health, marine aviation and

transport, and property and fire insurance.

At the time of writing in mid 2010, we have been able to ensure that the report includes actual data for

2008. We have generally been able to use data that was published during 2009 to adjust our forecasts for

the year as a whole. We have also extended our forecasts to 2014. We expect total premiums of

KWD185mn in 2009, which comprises non-life premiums of KWD143mn and life premiums of

KWD42mn. In 2014, the corresponding figures should be KWD382mn KWD318mn and KWD64mn

respectively. In terms of the key drivers that underpin our forecasts, we expect non-life penetration to rise

from 0.47% in 2009 to 0.65% in 2014, and for life density per capita to rise from US$46 to US$67.

BMI’s Insurance Business Environment Rating for Kuwait is 44.8

Islamic Finance

In spite of the general underdevelopment of its insurance sector, Kuwait stands out for the significance –

in a local context – of its takaful operators. In the event that official resources are mobilised to promote

Islamic finance, this sub-segment could grow rapidly.

Expansion Abroad

The growth prospects of the Kuwaiti insurers are constrained by the small actual (and potential) absolute

size of the market. In many cases, it is difficult for them to increase their market shares within Kuwait.

There is no sign of a catalyst for development of the life segment. The obvious solution is to underwrite

risks outside Kuwait – and/or to expand by way of acquisition.