GCC Predicts Regional Insurance Market by wendhrie

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									GCC Predicts Regional Insurance
Market
 While the Gulf region in the Middle East has typically been viewed as an area defined by oil and construction
related work, more recently the Gulf Cooperation Council (GCC) region has seen its insurance industry come into its
own. In order to get a better idea of how the industry has been developing regionally, the Qatar Financial Centre
(QFC) Authority performed a survey titled the "GCC Insurance Barometer".


For the study, they surveyed twenty executives from insurance providers and intermediaries that were either part of
international or local companies operating in the GCC region (this includes Saudi Arabia, the U.A.E., Oman, Kuwait,
Qatar and Bahrain). The respondents were given in-depth questions about their predictions for the future of the
insurance industry in the region and asked to identify challenges, strengths, weaknesses and opportunities that may
be present.


Those polled believed that the insurance industry in the GCC region would continue to prosper in the near future.
With the regional insurance market currently estimated to be US$15 billion, 60 percent of the survey respondents
expected the industry to outgrow itself by 2015. However, even though survey respondents believe the insurance
industry will outpace the growth of GDP, 60 percent believed that prices on personal lines of insurance would remain
stable while 55 percent believed that commercial insurance would do the same.


Some reasons that lead the majority of those asked to think the premiums taken in by the insurance industry will
continue to outpace the region's GDP include the fact that insurance penetration is extraordinarily low, providing it
ample opportunity to grow; regional governments have also been making investments into healthcare infrastructure,
such as Dubai has with the development of the Dubai Healthcare City.


With many GCC nations currently debating the implementation of mandatory health insurance initiatives due to rising
costs of healthcare, the increasing awareness may be helping to spur citizens into being proactive about their
insurance needs, especially when it comes to medical insurance. Bahrain for instance saw the premiums brought in
by its insurance sector grow 312 percent between 2001 and 2010, and during this time medical insurance saw the
largest growth in demand, with the number of medical insurance policies sold growing 1,840 percent during the
decade.


Indeed, the vast majority of the executives interviewed believed that the biggest driver of growth for the insurance
sector would be further mandatory insurance programs advanced by governments. Many countries such as Bahrain,
Qatar and Dubai are moving towards mandatory health insurance requirements, especially for expatriates.
Given the strong growth already demonstrated, and the ongoing possibility for more compulsory insurance plans, 60
percent of the surveyed executives are expecting foreign insurance companies to gain market share in the next 2
years. Executives put this down to the abilities of foreign insurance companies, such as their technical and
distribution proficiencies, combined with the expatriate population's proclivity to purchase insurance from companies
they recognize.


However, there were some concerns expressed, with the survey showing 60 percent of the executives believed the
regulatory framework in the region to be inadequate, with many pointing to regulations covering solvency ratios and
capital requirements. Despite this and other weaknesses and challenges in the market, the overall outlook remains
positive. With the growth the insurance industry has previously displayed and the plans for further development of
healthcare infrastructure alongside further mandatory health insurance requirements, there continues to be many
opportunities for both local growth and international investment.


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