Insurance is a strong driver of growth in the financial sector in Bahrain, and its contribution to the gross domestic product climbed to eight per cent in 2011 from three per cent in 2003, the Economic Development Board (EDB) said in a quarterly report.
The EDB Bahrain Economic Quarterly Report highlighted the insurance sector in the kingdom, indicating that insurance penetration in Bahrain has increased from 1.95 per cent to 2.55 per cent over the last decade, tripling the size of the sector to 335 per cent in the period between 2003 to 2011.
Much of this growth in insurance is attributable to increased consumer awareness about the benefits of insurance, as well as growth in real gross national income of 54 per cent from 2002 up to the end of the decade.
Another possible reason for the large growth in the insurance industry over the years is that Bahrain has witnessed consistent positive growth in net domestic credit.
Other indicators which the report looks at include the growth in the number and types of insurance businesses in Bahrain, and the predominant categories of insurance policies and their respective growth rates over the years.
In 1995, there were 109 insurance licences issued in Bahrain. Nearly a decade later this number reached 154 (2004), and as of 2010 the total number was 171, said the report.
This represents an increase in the number of registered insurance companies of around 57 per cent.
Considering that there was a much larger than proportionate increase in insurance as a whole than the number of insurance licences, this indicates that the size of contribution per insurance company grew significantly during the period.
The types of insurance policies in demand experienced a shift as well, with medical insurance policies increasing dramatically by 1,840 per cent and marine and aviation policies shrinking by 13 per cent. Overall insurance policies grew by 120 per cent over the decade.
Some insight behind the substantial rise in medical insurance policies lies in Bahrain's plans to make medical insurance mandatory for employers.
Conventional insurance growth weakened in Bahrain between 2007 and 2010, possibly in reaction to the financial crisis.
However this sector saw consistent positive net income despite the global downturn, a good indicator of its financial health. Bahraini insurance firms' investments increased 35pc between 2006 and 2010.
The reinsurance and retakaful sector saw extremely high average growth rates in premiums and claims between 2006 and 2010.