Sector to grow 10% in Kingdom
Bahrain seems to be effortlessly swimming against the listless currents prevalent in the GCC life-takaful sector as the majority of industry players across the Kingdom believe the relevant market is developing at a staggering 15-20 per cent year-on-year. However, three out of four life-takaful operators in the country, international or otherwise, still consider the domestic market as largely untapped, allowing them to estimate that the sector could put on an extra 5 to 10 per cent to its present growth figures in the coming decade providing it is well targeted, a sentiment echoed by Industry Focus.
The non-life-takaful market in the GCC is experiencing robust growth with insurance premiums soaring at a rate of about 10 to 15 per cent on average over the past three years, especially for the areas of motor and medical treatment, according to a recent report by Standard and Poor's. Life takaful, on the other hand, seems to lagging behind from a regional growth perspective with market penetration in many of the Gulf countries stagnating way below the stated mean for the overall industry.
Bahrain's stellar performance in this sector, therefore, represents a significant break from established region-wide trends. One of the assumed instigators behind the optimistic outlook assigned for the domestic industry ranges from a McKinsey and Company research finding, predicting a forthcoming exponential climb in unique health-risk factors, like type 2 diabetes and obesity, among a rapidly expanding local population base with a rising average age.
Despite a generally accepted view that mounting health concerns have been contributing to life-takaful market growth, only one in four of Bahrain's insurance companies feel the contribution could be deemed substantial. Most leading members of the industry, nevertheless, stand by the fact that the increasing number of high-net-worth individuals, rising wealth levels amid middle-class expatriates and locals alongside growing investment capabilities of the citizenry are the actual key factors driving the life-takaful sector's premium boost forecasts. Sixty per cent of Shari'a-compliant life-insurance firms also maintain that positive macro-economic indicators have been further aided by takaful's own capability to offer a more Islamic means to creating wealth in a country where Islamic values dominate every activity.
Yauvapa Siriwattasit
© Bahrain Tribune 2007
