Dubai: UAE retained its position as largest insurance market in the GCC accounting for 43.7 per cent the region’s gross written premiums (GWP) in 2020.
The UAE’s insurance premiums are expected to grow at a CAGR of 4.1 per cent between 2021-26. Expansion of compulsory business lines, growing standards of regulation, as well as favorable immigration policies are likely to support its growth. Saudi Arabia came second in the ranking with 39.1 per cent share of the GWP.
The GCC insurance industry has witnessed moderate growth in recent years amid macroeconomic concerns, constrained fiscal and business spending as well as intensifying competition within the industry.
The outbreak of COVID-19 since the start of 2020 has also weighed on the growth prospects of the broader industry. However, long-term prospects remain positive and digitization initiatives by insurers are helping in transforming the entire value chain.
Steady growth
The life insurance gross premium is projected to grow at a CAGR of 3.8 per cent from $3.8 billion in 2021 to $4.6 billion in 2026. The non-life insurance segment in the GCC is estimated to grow at a CAGR of 3.1 per cent from $22.7 billion in 2021 to $26.5 billion in 2026.
“Growth of the GCC insurance industry, which slowed since the onset of the pandemic, is expected to pick up on the back of projected rebound in the economy, reviving business confidence, and robust diversification plans adopted by the GCC nations,” said Sameena Ahmad, Managing Director, Alpen Capital (ME).
New direction
The pandemic compelled insurers to create a new ecosystem in accordance with consumer-driven digitalization preferences. At the same time, regulators across the GCC have introduced reforms as part of their broader fintech strategy, including the adoption of insurtech.
Strengthening regulatory environment and higher operating costs is making it increasingly difficult for smaller players to sustain with the same level of growth and profitability. This is likely to lead to higher consolidation through increased M&A as insurance companies are compelled to renew their focus on building resiliency.
