Business | General
Dubai targets reinsurance hub status
The Dubai International Financial Centre, regulated by the Dubai Financial Services Authority, intends to become the reinsurance hub of the Middle East, North Africa, South Asia and Levant, according to Dr Omar Bin Sulaiman, Governor of the DIFC.
- By Babu Das Augustine, Banking Editor
- Published: 00:41 March 18, 2008
- DIFC is taking the lead in building awareness of takaful and its benefits, according to Governor Dr Omar Bin Sulaiman.
- Image Credit: Supplied Picture
Dubai: The Dubai International Financial Centre, regulated by the Dubai Financial Services Authority, intends to become the reinsurance hub of the Middle East, North Africa, South Asia and Levant, according to Dr Omar Bin Sulaiman, Governor of the DIFC.
Addressing delegates to the World Insurance For-um that opened at the DIFC yesterday, Dr Bin Sulaiman said: "DIFC wants to act as the regional gateway to an untapped and vibrant region of 2.1 billion people and a combined economy worth $2.3 trillion in terms of GDP."
DIFC's focus area stretches from the western tip of North Africa to the eastern part of South Asia, comprising North and Eastern Africa, the Levant, the Caspian, the Indian subcontinent and the GCC states.
According to Moody's, the region represents just 0.2 per cent of the world's insurance market but it offers sound future growth potential for insurers, boosted by infrastructure and other investments and rising GDP per capita.
In addition, governments in the region are encouraging individuals to save for their retirement and are introducing compulsory insurance for certain non-life risks.
Consequently, the rates of growth of insurance premiums in the regional markets have far exceeded those seen globally and Moody's expects this trend to continue for the next few years.
Currently, the UAE is the largest insurance market in the Middle East, growing by 27 per cent in nominal terms in 2006, with total premium volumes reaching $2.7 billion.
For now, total insurance penetration as a percentage of GDP is just 1.7 per cent compared with a global average of 7.5 per cent.
"The DIFC is an onshore financial centre and there is no retail business or direct insurance business conducted here. Indeed, our aim has been to establish Dubai as a re-insurance hub with a captive domicile on a par with established domiciles such as Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Ireland, Isle of Man, Luxembourg and Vermont," Dr Bin Sulaiman said.
The growing demand for Islamic insurance [takaful] in the region has positioned the DIFC as a potential global hub for takaful. Currently, the global average annual premium growth rate stands at about 2.5 per cent.
By comparison, in the wider Middle East, the takaful market segment is growing by 20 per cent a year while takaful premiums in the GCC states are increasing by a phenomenal 40 per cent a year. There are more than 60 takaful companies operating in 23 nations.
"The DIFC is taking the lead in increasing regional and international awareness of takaful and its benefits. We are home to a range of both takaful and re-takaful firms, such as Group One Takaful and Takaful Re, and we are actively encouraging international companies to look at this market," he said.
The first day of the Forum was addressed by a number of speakers including Lord Patten of Barnes CH.
The agenda focused on global macro issues, featuring world leaders' opinions on evolving risks and challenges. The second day will look at industry micro issues, consisting of perspectives on selected industry matters.
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