The Gulf’s insurance market is set to grow to be worth $44 billion by 2021, despite challenges such as the lower oil price and reduced government and corporate spending, according to a new report.
In the latest report on the sector by Alpen Capital, the investment banking advisory firm forecast that the insurance market in the six member states of the Gulf Cooperation Council will grow by an average of around 10.9 percent in the coming years, rising from $26.2 billion in 2016 to $44.0 billion in 2021.
“The GCC Insurance industry is stepping into the next phase of growth, fuelled by rising insurance awareness, economic revival and infrastructure developments and an expanding consumer base. Further, the maturing and stringent regulatory environment is likely to create strong, stable and sustainable business models”, Sameena Ahmad, managing director of Alpen Capital, was quoted as saying in a press statement. (Read the full report here).
Looking at the individual GCC countries, the report found that between 2016 and 2021, the United Arab Emirates and Oman will be the fastest growing markets, growing by an average of 12.1 percent, followed by Saudi Arabia at 10.5 percent. This will be driven by the introduction of mandatory health insurance in Oman and a new motor insurance pricing regime in the UAE, the report said.
The UAE accounts for 40 percent of the value of insurance premiums in the Middle East and North Africa and those in the industry have forecast a positive outlook for 2018.
“I consider the outlook for the insurance industry as a whole is positive. I see it moving in the right direction as a result of regulations on one hand. On the other hand, initiatives by the government, like introducing compulsory insurance schemes or Expo 2020, create significant opportunities for the insurance industry,” Ahmad Idris, CEO of the Abu Dhabi National Insurance Company, was quoted as saying in a video interview with The Prospect Group. (Watch the full video report here).
There is a lot of potential growth in the sector as UAE consumer expenditure on insurance-related products currently accounts for just 0.04 percent to the country's GDP, according to a report by Khaleej Times, citing figures from business intelligence company Euromonitor International.
One of the big issues facing companies in the UAE in the coming months is the introduction of value-added tax on a number of goods and services from January 1, 2018. However, some analysts and experts have questioned whether the insurance sector is ready for this new taxation.
James Mitchell, a business tax specialist with accountancy firm Smith & Williamson, told Zawya that while the recent publication of the rules related to VAT in the UAE had provided greater clarity, there "are still a great number of questions left unanswered for complex businesses, such as those in the insurance and property sectors".
A senior UAE banker last month also called for the introduction of Vat to be delayed to allow the insurance sector, and the wider financial services industry, more time to prepare.
“We call to postpone implementing the VAT to give time to all the sectors to implement it correctly, whether in banking, insurance, or other sectors,” AbdulAziz Al Ghurair, chairman of the UAE Banks Federation told reporters on the sidelines of a banking event held in Abu Dhabi in late November.
“Neither banks, nor insurance companies are ready,” he added speaking in Arabic. “We need at least six months from the time we receive all the detailed implementing regulations to be ready, along with details for each sector, and how to calculate the tax for each product,” he added.
The UAE’s VAT implementing regulations were released late last month. While some have called for an 18-month postponement, any extension between 6-18 would be welcomed, he said.
Further reading:
(Writing by Shane McGinley; Editing by Yasmine Saleh)
(shane.mcginley@thomsonreuters.com)
© ZAWYA 2017
In the latest report on the sector by Alpen Capital, the investment banking advisory firm forecast that the insurance market in the six member states of the Gulf Cooperation Council will grow by an average of around 10.9 percent in the coming years, rising from $26.2 billion in 2016 to $44.0 billion in 2021.
“The GCC Insurance industry is stepping into the next phase of growth, fuelled by rising insurance awareness, economic revival and infrastructure developments and an expanding consumer base. Further, the maturing and stringent regulatory environment is likely to create strong, stable and sustainable business models”, Sameena Ahmad, managing director of Alpen Capital, was quoted as saying in a press statement. (Read the full report here).
Looking at the individual GCC countries, the report found that between 2016 and 2021, the United Arab Emirates and Oman will be the fastest growing markets, growing by an average of 12.1 percent, followed by Saudi Arabia at 10.5 percent. This will be driven by the introduction of mandatory health insurance in Oman and a new motor insurance pricing regime in the UAE, the report said.
The UAE accounts for 40 percent of the value of insurance premiums in the Middle East and North Africa and those in the industry have forecast a positive outlook for 2018.
“I consider the outlook for the insurance industry as a whole is positive. I see it moving in the right direction as a result of regulations on one hand. On the other hand, initiatives by the government, like introducing compulsory insurance schemes or Expo 2020, create significant opportunities for the insurance industry,” Ahmad Idris, CEO of the Abu Dhabi National Insurance Company, was quoted as saying in a video interview with The Prospect Group. (Watch the full video report here).
There is a lot of potential growth in the sector as UAE consumer expenditure on insurance-related products currently accounts for just 0.04 percent to the country's GDP, according to a report by Khaleej Times, citing figures from business intelligence company Euromonitor International.
One of the big issues facing companies in the UAE in the coming months is the introduction of value-added tax on a number of goods and services from January 1, 2018. However, some analysts and experts have questioned whether the insurance sector is ready for this new taxation.
James Mitchell, a business tax specialist with accountancy firm Smith & Williamson, told Zawya that while the recent publication of the rules related to VAT in the UAE had provided greater clarity, there "are still a great number of questions left unanswered for complex businesses, such as those in the insurance and property sectors".
A senior UAE banker last month also called for the introduction of Vat to be delayed to allow the insurance sector, and the wider financial services industry, more time to prepare.
“We call to postpone implementing the VAT to give time to all the sectors to implement it correctly, whether in banking, insurance, or other sectors,” AbdulAziz Al Ghurair, chairman of the UAE Banks Federation told reporters on the sidelines of a banking event held in Abu Dhabi in late November.
“Neither banks, nor insurance companies are ready,” he added speaking in Arabic. “We need at least six months from the time we receive all the detailed implementing regulations to be ready, along with details for each sector, and how to calculate the tax for each product,” he added.
The UAE’s VAT implementing regulations were released late last month. While some have called for an 18-month postponement, any extension between 6-18 would be welcomed, he said.
Further reading:
- UAE insurance industry has room to grow
- Alpen Capital's latest report on the GCC Insurance sector highlights its growth potential
- UAE accounts for over 40% of insurance premiums in MENA
- Senior UAE banker calls for VAT to be postponed
- Insurance package for screening of disorders in Dubai
- Stronger underwriting profitability for GCC's Islamic insurers woos investors
(Writing by Shane McGinley; Editing by Yasmine Saleh)
(shane.mcginley@thomsonreuters.com)
© ZAWYA 2017
