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Posted On: 10 March 2015 02:11 pm
Updated On: 12 November 2020 01:53 pm

MENA insurance markets resilient to economic headwinds

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Confidence prevails in the Middle East and North Africa (MENA) insurance markets as insurers expect regional premiums to outgrow GDP and rates to finally stabilize or even start rising. This is the main finding from the 3rd Annual MENA Insurance Barometer, published today by the Qatar Financial Centre (QFC) Authority at its annual flagship conference MultaQa Qatar in Doha.

“According to the MENA Insurance Barometer the region’s strong fundamentals remain intact,” says Shashank Srivastava, CEO and Board Member, QFC Authority. “Insurance penetration is on the rise, demographics are favourable, and the ability of most Gulf countries to withstand short-term volatility in oil pricing is strong.” The most recent survey is based on 37 in-depth interviews with senior executives of regional and international (re)insurance companies and intermediaries, sharing their assessment of the current state and near-term prospects of the US$ 50 billion MENA insurance markets.

According to the International Monetary Fund, the region’s economy is expected to grow at an annual inflation-adjusted rate of 4.1% from 2014 to 2019, slightly ahead of the projected global average of 3.9% per annum. Although political instability prevails in countries such as Iraq, Syria or Libya, conditions in Iran and Egypt, for example, are expected to improve. In the GCC, the current pipeline of investments into infrastructure and construction projects comprises projects in the magnitude of US$ 690 billion (according to MEED) to be awarded from 2015 to 2018.

While the region’s average income per capita is similar to the global level, insurance penetration remains extraordinarily low, with premiums accounting for a mere 1.3% of GDP, a fifth of the global average. This gap is narrowing, however, as MENA insurance markets outpace regional GDP growth. Between 2008 and 2013, total non-life and life insurance premium volumes in the region expanded from about US$ 30 billion to more than US$ 50 billion. Going forward Swiss Re expects premiums to grow at an inflation-adjusted 5.5% for 2015 to 2016, higher than the International Monetary Fund’s economic growth forecast for the region.

The executives polled in the MENA Insurance Barometer see the region’s strong economic and direct insurance market growth as its most important current strength, followed by a massive pipeline of major infrastructure and construction projects and a relatively moderate natural catastrophe exposure.

Personal lines are viewed as the key future opportunity of MENA insurance markets, due to population growth, legislation and, partially, improving rates. The prospect of additional major infrastructure and construction projects in the Gulf region ranks second. Low penetration levels are the third most frequently mentioned opportunity.

The Barometer found that 86% and 34% of executives polled view current prices in MENA commercial and personal lines business, respectively, as being below the average of the past five years. 81% and 89%, respectively, expect commercial and personal lines rates to remain stable or improve over the next 12 months, very similar to last year. However, in commercial and personal lines the share of those expecting rate increases has grown from 19% to 30% and 21% to 37%, respectively. Rate expectations remain moderately positive as prices appear to have hit bottom and regulators continue to take supportive action.

A copy of the report can be downloaded at: