Markaz: GCC Insurance industry to reach USD 40 Bn mark by 2017


Kuwait Financial Centre “Markaz” recently published the executive summary of GCC Insurance report. In this research note, Markaz analyses the trends in Insurance Premium volumes across the GCC in the Takaful (Islamic Insurance), Life, Non-Life, Health, and Reinsurance domains and compares the macro insurance factors such as insurance density, insurance penetration, etc. of the GCC states with that of world.

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. 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 Bn USD by end of 2015 and apparently touch USD 40 Bn mark by 2017.

The GCC enjoys a market size of $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% compared to the global average of 6.5%.

Nonetheless, the insurance industry in the GCC region is catching up with the global trend and has witnessed a CAGR of about 18% between 2006 and 2012, compared to the global CAGR of just 4.37% during the same period. The drivers for the insurance industry in the GCC include the 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 favorable demographic trend with youth population projected to grow and the middle class set to rise in the next few years.

The Takaful Islamic Insurance 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 USD 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% 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 USD 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 USD 4.69 Billion in terms of premium volume.

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, which is selling of insurance products via banks, is gaining huge 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 customized products for the consumers over the online medium.


About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre K.P.S.C “Markaz”, with total assets under management of over KD 982.6 million (USD 3.45 billion) as of June 30, 2013, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.