| 01 Apr 2009 |
|
Mideast market poised for growth, S&P says
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Wednesday, Apr 01, 2009
Gulf News
Dubai: The insurance market in the Middle East will continue to see growth in certain sectors, especially co-operative insurance or Takaful, which is Sharia-compliant, and personal lines such as life and health insurance, according to analysts at credit ratings' agency Standard and PoorStandard and Poor
's.
"Takaful is expanding successfully into the commercial line business and we expect this to continue," said Kevin Willis, director (financial institutions) at Standard and PoorStandard and Poor's.
"The largest GCC market, Saudi Arabia, will definitely see Takaful growth," Willis said.
In recent years, conventional insurance rates have grown on average by between 15-20 per cent regionally, but Takaful rates grew by between 20 and 25 per cent. Last year, it is estimated that the insurance sector in the UAE grew by 35 per cent.
The Takaful sector is seen as a more acceptable option for life protection among the regional population.
Presently, life insurance rates in Saudi Arabia are estimated at below one per cent whereas in developed markets such as Europe, the figure is normally above 50 per cent.
Despite significant market potential, the insurance sector in the Middle East records low penetration and density levels.
Premiums are expected to continue growing in 2009 across the GCC states, with Qatar projected to record between 15 and 20 per cent premium growth, according to S&PS&P, In the UAE, it is estimated that Dubai will see flatter growth, in the lower single digits, while Abu Dhabi is expected to record growth closer to the 10 per cent mark.
"The expatriate community is becoming more settled in the countries, and governments are assisting with asset ownership," said Willis. "As they [expatriates] become more settled, there will be a need to protect assets and families."
"The "stress" levels for the region are always set at a high level. An immature insurance market with an immature stock market has always been factored in [the ratings]," according to Nigel Bond, director for financial institutions (ratings service) at S&PS&P.
© Gulf News 2009. All rights reserved.
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