Kuwait Financial Centre “Markaz” has analysed trends in insurance premium volumes across the GCC in the Takaful, Life, Non-Life, Health, and Reinsurance sectors.
While economic growth has been strong in the region, the insurance sector has lagged behind.  The lack of awareness and the transient nature of expatriates are key factors linked to the very low levels of insurance penetration. Markaz said the opportunities for both local and international insurers in the industry are huge, resulting in increased competition, and a challenging business environment. However, backed by strong growth opportunities in the GCC, we expect the entire industry to grow and reach approximately $28 billion by end of 2015 and apparently touch $40 billion mark by 2017.
Markaz reports the GCC market at $16.3 billion in terms of premium volume. As of 2012, the GCC region exhibits an insurance penetration (including life and non-life insurance) of just about 1.14 per cent compared to the global average of 6.5 per cent.
Nonetheless, the insurance industry in the GCC region is catching up with the global trend and has witnessed a CAGR of about 18 per cent between 2006 and 2012, compared to the global CAGR of just 4.37 per cent during the same period. The drivers for the insurance industry in the GCC include rising income levels, high amount of expatriate population, the increasing awareness among the population about the benefits of insurance, the Government’s policies mandating insurance in some sectors. The region also has a favourable demographic trend with youth population projected to grow and the middle class set to rise in the next few years.
Takaful has developed well over the recent years in the GCC region mainly owing to the development of Islamic finance practices, large Muslim population and changes in consumer patterns post the global financial crisis. The life insurance sector has seen a very little growth over the years as the GCC population has primarily relied on the respective Governments for absorbing life related risks. Hence the life insurance market was about $2.185 billion as of 2012
The Non-Life insurance has been the major driver in this region amidst all other sectors with nearly 87 per cent of the premiums being collected in this segment primarily because of increasing business activity in the region and government’s plans for economic diversification. The Non-Life insurance sector accounted for $14.1 billion in 2012 in GCC. Mass construction, huge energy plants, and the expansion of business in this region provide huge opportunities for Non-Life insurance.
Health insurance is largely popular in the GCC due to the introduction of compulsory health insurance schemes. Driven by population growth, and greater awareness of healthcare issues, the health insurance industry in the GCC has grown over the years and is worth about $4.69 Billion in terms of premium volume
Markaz notes that in terms of regulations, the GCC countries are taking steps towards enhancing the insurance regulation standards so as to upgrade them towards global practices. The lack of unified practices across the GCC region makes it difficult for operators to comply with the regulatory requirements of each GCC states. Bancassurance is gaining prominence in the GCC. Other distribution channels used are agents, brokers and online channels. However, for the industry to grow, operators should focus on delivering customised products for the consumers over the online medium.