GCC insurance sector reaches $24b
(Manama) – The GCC insurance industry has more than tripled between 2006 and 2015, with insurance premiums increasing to $24 billion as of the end of 2015 compared to $6.4 billion in 2006, according to a senior Central Bank of Bahrain (CBB) official.
Abdul Rahman Al-Baker, Executive Director of Financial Institutions Supervision at CBB, said the GCC growth represents a compound annual growth rate of around 16 percent over the period, although the growth in each market varies.
“Such growth in insurance industry is due to several key demographic factors like the economic growth, population expansion, as well as increasing the life expectancy which have impacted the demand of insurance products in the Gulf region. In addition, Governments investment in infrastructure projects have also provided new underwriting opportunities for further growth of the industry,” Al Baker said.
“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, 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 in developing countries will continue to attract insurers, both domestic and foreign, to invest in their insurance markets, but this is likely to increase the competition and put even further pressure on the profitability in the sector, he added.
Despite the robust growth, the insurance industry in developing countries accounted for around 7% of the world market, which was estimated at $4.8 trillion in total revenue.
Insurance penetration within the developing countries is also well below 2 percent of the Gross Domestic Products (GDP), compared to advanced economies such as the US at 7.3% and the European Union countries at around 10 percent of the GDP, he said.
In Bahrain, the CBB is responsible for the licensing and supervision of the insurance entities in the Kingdom.
“These include insurance firms that are locally incorporated or branches of foreign companies, insurance brokers, consultants and captive mangers,” he said.
“They also include supplementary insurance services providers like actuaries, loss adjusters, and Third Party Administrators which should be fit and proper and have the relevant expertise to offer these activities. As of the end of August 2016, the licensed insurance entities in Bahrain reached 150. The total gross premiums, as of the end of 2015, reached BD273 million compared to BD 95 million in 2005, an average growth of almost 20 percent per annum. Overall, the percentage of general insurance business represents almost 80% of the total premiums, while the life insurance represents the remaining balance, which is 20%.”
The outstanding growth was mainly due to the increase in the economic growth and the remarkable growth in Life insurance, Takaful and Medical Insurance in Bahrain during the past ten years, he added.