GCC Insurance Industry To Reach $40bn By 2017

GCC health and non-life insurances are driving up premium volumes collected in the region despite low insurance penetration rates, according to a report by Kuwait Financial Centre Markaaz.

Compulsory health insurance has driven up value of the GCC health insurance industry to $4.69 billion in terms of premium volumes. Population growth and increased awareness of health issues has contributed further to the growth of the industry.

Non-life insurance accounted for 87 per cent of premiums collected in this segment due to increasing business activity in the region and the government’s plans for economic diversification.

Mass construction, huge energy plants and business expansion provides growth opportunities for the non-life insurance sector in the GCC, which touched $14.1 billion in 2012, said Markaaz.

However life insurance markets showed minimal growth and was valued at $2.18 billion in 2012 due to an over reliance on the government to absorb life related risks.

Overall, the report found that insurance penetration in the region is low owing to the transient nature of expatriates and a lack of awareness. The Gulf region has a market size of $16.3 billion in terms of premium volume but had an insurance penetration of just 1.14 per cent in 2012 as compared to the global average of 6.5 per cent.

But this is gradually changing as the insurance industry is matching up to global trends, the report said. The industry witnessed a compound annual growth rate (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.

With strong potential for growth in GCC, the report forecasts the insurance industry to be worth $28 billion by 2015 and touch $40 billion by 2017.

Rising income levels, a large expatriate population and increasing awareness about the benefits of insurance and government’s policies mandating insurance has helped in fuelling the industry’s growth. The Gulf states also have a favourable demographic trend for insurance penetration with a youth population that is projected to grow along with a rise in the middle class, the report added.