|13 June, 2019

Insurance premiums in Bahrain grow 6% in 2018

Government investments in infrastructure projects have also provided new underwriting opportunities for further growth: official

The Central Bank of Bahrain is seen in Manama. Image for illustrative purposes.

The Central Bank of Bahrain is seen in Manama. Image for illustrative purposes.

REUTERS/Hamad I Mohammed

MANAMA: Insurance premiums in Bahrain grew by six per cent year-on-year to BD284 million as of the end of 2018, due to key demographic factors like economic growth, population expansion, as well as increasing life expectancy, a top regulatory official said yesterday.

Central Bank of Bahrain executive director of financial institutions supervision Abdulrahman Al Baker told the GDN that government investments in infrastructure projects have also provided new underwriting opportunities for further growth of the industry, not just in Bahrain but also in the wider Mena region.

He was speaking on the sidelines of InsurByte Conference 2019 at the Gulf Hotel Bahrain Convention and Spa.

Mr Al Baker said premiums in the Mena region more than doubled between 2007-2017, increasing to around $50 billion as of the end of 2017 compared with $23.4bn in 2007.

This represents a growth of more than 11pc per annum over the period.

In the GCC countries, healthcare has not shown any signs of pullback in spending as it has been one of the primary sectors in the long-term vision of GCC governments.

“One of the major force behind the industry’s growth in recent years has been the implementation of compulsory health insurance schemes in various jurisdictions, especially the GCC, as well as the outstanding demand for Takaful products which create strong growth avenues for insurance companies in the region.

Overall, the positive growth outlook on the region and the low insurance penetration, which is considered to be the key opportunity for future growth, will continue to attract insurers, both domestic and foreign, to invest in the Mena insurance markets, but this is likely to increase the competition and put even further pressure on the profitability in the sector.”

However, the insurance companies in the region are generally strongly capitalised and possible future pressure on profitability is unlikely to reduce the strength of the sector in the medium term.

Mr Al Baker said the Mena insurance market will continue to see premium growth of around 5pc for non-life lines and over 7pc on the life side.

Looking ahead, he expects further growth in the insurance industry in the Mena region driven by moderate economic growth, despite slower than expected oil price recovery.

“Sector growth will continue to be supported by large investment in infrastructure and construction projects in the Mena region, further enhancement of regulatory and supervisory standards, as well as the support of governments in making an increasing number of insurance products compulsory.”

Innovation and financial technologies are another big factor that insurers should keep an eye on in the coming years to upgrade their business and grow the sector.

On challenges facing the industry, the official said competition due to the increase in the number of companies in each market has put pressure on profitability.

The current global economic uncertainty poses substantial challenges to insurance companies by creating volatility in investment values and returns.

“Public awareness about insurance and its benefits is also another challenge as many fail to recognise insurance as an effective means of wealth protection, saving and security,” added Mr Al Baker.

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