Compulsory insurance requirements and continued investments into infrastructure projects will drive demand in the Middle East and North Africa region's insurance sector, according to a new report released here today.
The Second MENA Insurance Barometer, published today by the Qatar Financial Centre (QFC) Authority at the opening of the 8th MultaQa Qatar Conference in Doha, reveals a strengthening of confidence in the region's insurance sector The region's fundamentals continue to be attractive: Insurance penetration is on the rise, demographics are favourable and the economy remains on a steady growth trajectory The Barometer is based on 38 interviews with senior insurance executives and intermediaries operating in the region
Three-quarters of the executives polled expect regional insurance premiums to outgrow gross domestic product (GDP) over the next 12 months
Between 2007 and 2012 the region's economies grew at an inflation-adjusted growth rate of 4.7% per annum markedly faster than the global average of 3.3%
Personal lines are set to benefit from additional compulsory insurance requirements, while commercial insurance will receive a boost from new infrastructure and construction projects.
The region's greatest strengths are its continued economic growth and the solid rise in direct insurance markets
Opportunities arise from the large pipeline of major infrastructure and construction projects, the low insurance penetration levels of about 1.3% (premiums as a share of GDP), a mere fifth of the global average of 6.5%, and the population growth, fuelled by a continued influx of expatriates
Chief Executive Officer and Board Member of the QFC Authority Shashank Srivastava said, "Based on their strong fundamentals, the MENA Insurance markets will continue to grow
The Barometer enhances market transparency as a key prerequisite to doing insurance business and, therefore, is an essential part of our commitment to the sector." The region's insurance markets also display weak spots: Current insurance prices, both in personal and commercial lines, are perceived as insufficient
However, as rates might have hit bottom, an increasing number of executives expect stable to rising prices and hence improvements in profitability
Despite the weak pricing, only 16% of respondents expect MENA insurance markets to consolidate over the next 12 months as improved levels of capitalisation and the family ownership of many regional insurers stand in the way
Prospects for foreign insurers in the region seem to be deteriorating
Only 35% of executives polled expect that foreign insurers will gain market share over the next 12 months, down from 50% a year ago
Source Qatar News Agency
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