GCC sector maintains growth
The Gulf Co-operation Council (GCC) insurance sector maintains resilient growth, given the significant penetration gap compared to the advanced economies, and despite challenges such as a drop in oil prices and reduced public and business spending, according to a report from Alpen Capital
Developing regulations, economic diversification efforts, mandatory health insurance and favourable demography present a bright outlook for the sector. “The GCC insurance industry is stepping into the next phase of growth, fuelled by rising insurance awareness, economic revival and infrastructure developments, and an expanding consumer base,” noted the report. “Further, the maturing and stringent regulatory environment is likely to create strong, stable and sustainable business models.”
According to Alpen Capital, the GCC insurance market is projected to grow at a CAGR of 10.9 per cent from US$26.2 billion in 2016 to $44.0 billion in 2021. This projection is based on existing fundamentals of the industry and economic outlook.
Alpen’s report continued: “The growth in GWP is likely to be moderate in 2017, as the industry players are adapting to the new regulations amidst increasing competition and recovering economic activity. On one hand, increased capitalisation requirement and actuarial pricing are improving the financial performance of insurers, and on the other hand, the regulations are encouraging consolidation activity.”
Between 2016 and 2021, insurance markets in the UAE and Oman are anticipated to grow at the fastest annualised average pace of 12.1 per cent, followed by Saudi Arabia at 10.5 per cent.
The premium growth in Oman is likely to be driven largely by the introduction of mandatory health insurance, and that in the UAE by a new motor insurance pricing regime. Additionally, macro factors like population growth, infrastructure developments and revival of business activity will aid growth across the countries.