Thursday, Mar 14, 2013
The insurance market in the Middle East and North Africa (Mena) region is forecast to hit $50 billion (Dh183.5 billion) in premiums this year, up 19 per cent from $42 billion in 2011, a Zurich-based consultancy firm told Gulf News.
The growing consumer incomes and expanding youth population in the region are likely to push the demand for insurance coverage, aside from catastrophic events that lead to financial losses such as building fires in the UAE and recent flood in Saudi Arabia.
“Governments are expected to continue to play a key role in driving insurance demand and awareness by implementing additional compulsory insurance schemes and funding new major infrastructure projects,” said Dr Kai-Uwe Schanz, partner and chairman of Dr Schanz, Alms and Company AG.
The Mena Insurance Barometer, a survey published by the Qatar Financial Centre Authority (QFC) showed that majority (68 per cent) of senior executives from insurers, reinsurers and brokers in Mena are bullish about the market, with insurance premiums likely to grow faster than the region’s gross domestic product (GDP).
So far, the annual premium payments made by corporations and individuals to insurers in the region account for just 1.3 per cent of the GDP, a fifth of the global average. In countries like the UK, Japan, Netherlands and Switzerland, the penetration ratio is more than 10 per cent.
Schanz said the gap is closing slowly, as premiums have recently grown faster than the economy as a whole, although it will take years before penetration levels come close to the global average of about 7 per cent.
Shashank Srivastava, CEO and board member of QFC noted that the Mena region is an attractive emerging insurance market which any international or regional insurer and reinsurer should have on its strategic agenda.
Growth rate
As of 2011, the insurance market in Mena was worth $42 billion in annual premiums, up from $26 billion in 2007. Non-life markets, which accounted for $35 billion in 2011, grew at an average annual growth rate of 7.5 per cent, while the life markets, accounting for $6.6 billion, expanded by 10.1 per cent per annum, adjusted for inflation.
QFC’s Barometer also noted there is “fierce competition and abundance of reinsurance capacity in the region, “putting pressure on technical results and driving up acquisition costs.
Some executives (36 per cent) expect the market to consolidate over the next 12 months, while 50 per cent expect foreign insurers to gain market share over the next two years.
By Cleofe Maceda Senior Reporter
Gulf News 2013. All rights reserved.
