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Lebanon leads MENA region in terms of total insurance premiums to GDP

07 July 2010

BEIRUT: Leading global reinsurer Swiss Re said Lebanon ranked the first in the Middle East and North Africa in terms of total insurance premiums to GDP in 2009.

The report, entitled “World Insurance in 2009, said that Lebanon ranked 48th globally in terms of insurance premiums to GDP. The report was published by Bank Audi’s Weekly Monitor.

It added that the country maintained the lead in the MENA region for the fifth year in a row.

Total insurance premiums to GDP are also known as insurance penetration, and Lebanon’s penetration rate was 3.1 percent, compared to 3.4 percent last year.

In the region, Lebanon ranked ahead of Morocco with 2.8 percent (50th worldwide), the United Arab Emirates with 2.5 percent (55th), and Jordan with 2.3 percent (56th).

The MENA average insurance penetration ratio stood at 1.7 percent, but remained far from the world average of 7.0 percent, thus reflecting a strong potential for further expansion.

But Lebanon’s ratio signifies that the sector is well developed in the country when looking at it within a regional context.

In terms of insurance density, defined as the total insurance premiums per capita, Lebanon came in the fourth position in the MENA region (51st worldwide) with $225.5, ranking after the UAE with $1,111.8 (31st worldwide), Bahrain with $624.8 (36th) and Qatar with $ 548.6 (38th).

In terms of total premiums, the survey ranked Lebanon 64th in the world, with $952 million in total premiums reported in 2009, up by 8.1 percent from $881 million in premiums reported in the previous year. Out of the 12 MENA countries, Lebanon came in the fifth position, ahead of Algeria (70th worldwide), Qatar (72nd), Tunisia (74th), Oman (78th), Jordan (84th), Bahrain (86th), and Kuwait (87th), while trailing the United Arab Emirates (45th), Saudi Arabia (48th), Morocco (53rd) and Egypt (57th).

In Lebanon, life premiums accounted for 24.4 percent of total premiums in 2009 with $232 million, versus a higher 32.9 percent in the previous year, while the non-life business, or general insurance market, continued to represent the bulk of insurance activity in Lebanon, with 75.6 percent, or US$ 720 million, against a lower 67.1 percent in 2008.

“Here, one should note that life premiums in Lebanon declined by a yearly 20 percent in 2009, while non-life premiums grew by an annual 22 percent in 2009. Still, the life insurance segment seems quite developed in Lebanon compared to the rest of the MENA region, as life insurance activity accounted for 17.8 percent of the total MENA insurance market size in 2009,” Bank Audi’s report said.

The report added that naturally, the non-life insurance market continued to account for the majority of the MENA insurance activity, with a share of 82.2 percent.

Lebanon’s insurance premiums accounted for 5.1 percent of total premiums in the MENA region in 2009. The MENA insurance industry reached $18.5 billion in size, growing by 5.4 percent in nominal terms.

Meanwhile, the growth of Lebanon’s insurance industry of 8.1 percent was higher than the growth in the region’s industry, and surpassed the real growth rate of the emerging countries’ insurance market which stood at 3.5 percent, while it far outpaced the negative real growth of the world’s industry (-1.1 percent) and the negative real growth of industrialized countries’ insurance market (-1.8 percent).

The sector in Lebanon saw a healthy growth rate last year, undeterred by the impact of the global financial crisis.

The growth in the insurance sector in Lebanon in 2009 has naturally led to a yearly advancement in other aggregates of the sector cited by the Swiss Re.

While insurance penetration in the country decreased slightly to 3.1 percent in 2009 from 3.4 percent the year before, insurance density went up by 6.1 percent from $212.6 to the current $225.5.

Growth in the insurance sector in Lebanon in 2009 was spurred by an expansion of the non-life insurance segment which recorded a significant 22 percent growth, much higher than the MENA average growth of 4.4 percent, with the non-life insurance segment representing the bulk of the insurance industry in Lebanon.

“However, the life insurance segment in Lebanon declined by 20 percent year-on-year, compared to a slowdown in the world average growth of 4.4 percent,” the report said. – The Daily Star

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