Regulatory passporting which will allow GCC insurance companies to perform activities across borders is a key imperative for the sector’s sustainable growth, experts have said.
According to Middle East Global Advisors vice-chairman and chief executive Dr Sayd Farook, a major growth hurdle for regional insurers was the fact that regulations were uneven across the Middle East, and lacking in some critical areas.
“Well-established companies in well-regulated overcapacity markets like Bahrain should be allowed to establish a presence or carry out its permitted activities in under-served countries like Saudi Arabia and Qatar,” he said during a Press briefing at the Central Bank of Bahrain (CBB) yesterday.
The meeting was called to announce that a groundbreaking report on the region’s insurance industry will be launched at the 12th edition of the Middle East Insurance Forum (MEIF) 2016 hosted by Bahrain next month. To be launched during the event, the Finance Forward Insurance Outlook Report 2016 is aimed at helping leaders in the insurance industry make key strategic decisions and capitalise on emerging opportunities.
Also addressing the media at the briefing was CBB executive director of financial institutions supervision Abdul Rahman Al Baker, who said while the Middle East insurance industry had grown considerably; it still lagged behind other emerging and frontier markets in overall penetration. “Instead of encouraging competition between insurance companies and takaful operators for a share of a small market, we need the entire sector to find strategies to make the market grow more rapidly to support consolidation and create a more robust capital base,” he added.
Earlier, sharing some of the findings of the report’s survey, Dr Farook said budget cuts impacting infrastructure spending across the Middle East constitute a major concern for many survey participants, especially given that commercial lines have been buoyed by large projects. “In 2014, growth in commercial lines was just 6.6pc (compared to 19.6pc for personal lines) which may account for survey respondents’ more optimistic outlook for medium-term premium growth in personal lines,” he said.
“Many respondents are looking into online channels, particularly for personal lines, and into expanding outreach to underinsured consumers to support their future growth – especially digital strategies.”
The outlook for the industry was not very promising, said Dr Farook, as the financial services industry faced an uncertain global economy. “Low oil prices, rising interest rates, a strong dollar and concerns about emerging market growth will most certainly weigh on financial institutions, banks as well as insurers in the Middle East,” he added. Convened by Middle East Global Advisors, MEIF 2016 will be held on February 2 and 3 at the Gulf Hotel’s Gulf Convention Centre.
By Avinash Saxena
Copyright 2019 Al Hilal Publishing and Marketing Group