Dubai: The insurance sector 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, according to the GCC Insurance Report from Alpen Capital.
The UAE will continue to be the largest insurance market in the region with a market size expanding to $18.1 billion (Dh66.4 billion) by 2021, with Saudi Arabia coming in a close second at $16.4 billion.
“Growth of premiums in UAE will be driven by large project developments ahead of Expo 2020, pricing revisions and new opportunities such as property insurance,” said Siraj Bhavnagarwalla, Managing Director, Alpen Capital (ME) Limited.
The GCC insurance market is projected to grow at a CAGR [compounded annual growth rate] of 10.9 per cent from $26.2 billion in 2016 to $44. billion in 2021. The growth in gross written premium (GWP) is likely to be moderate in 2017, as the industry players are adapting to the new regulations amid 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.
“The GCC insurance sector maintains resilient growth. 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,” said Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.
A number of factors such as economic diversification post the oil price meltdown leading to creation of more insurable assets; compulsory health insurance and regulatory reforms that aim at ensuring transparency and providing insurers access to capital are boosting the prospects of insurers across the region.
Young working people
The consumer base in the region is set to grow further, with an anticipated addition of 6.5 million people by 2021, largely comprising young and working people, increasing number of women in the workforce and rising urbanisation are the factors driving demand for life and non-life insurance products. Increased awareness of the benefits of insurance because of social media and higher education.
The growth in GWP is likely to be moderate in 2017, as the industry players are adapting to the new regulations amid 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 in the UAE by the new motor insurance pricing regime. Additionally, macro factors like population growth, infrastructure developments and revival of business activity will aid growth across the countries.
While socio-political instability in Saudi Arabia and Qatar are likely to restrict growth in these countries the near term, it is expected that growth will pick up following industry consolidation and a revival in economic conditions.
