Summary of Key Findings
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Confidence in the future of The Cooperation Council for the Arab States of The Gulf (GCC) insurance sector remains strong. 60% of respondents expect that premium growth will exceed that of the region’s gross domestic product (GDP). Robust economic growth is anticipated to continue to be the most powerful driver of insurance market growth going forward. The GCC region’s exceptionally low insurance penetration and continued strategic investment in local economies are considered key long-term opportunities for the insurance sector.
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The major weaknesses of GCC insurance markets are perceived to be insurance regulations—viewed as inadequate by 60% of respondents—and low levels of risk retention. Reflecting the Arab Spring, geo-political risk features most prominently on the list of threats and challenges, followed by an uncertain global economic outlook.
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The Barometer found that an overwhelming number (90%) of respondents consider commercial insurance rates to be low, while just over half (58%) hold the same view for personal lines business. The majority of respondents do not expect further deterioration of rates over the next two years. Profitability levels are judged slightly more positively—with 70% and 53%, respectively, considering them as low—suggesting that low loss ratios continue to support the market’s performance. The outlook for profitability is similar to the respondents’ assessment of pricing trends—60% and 53%, respectively, do not expect any major change to the status quo.
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From a line of business perspective, growth and profitability seem to be inversely correlated. Medical insurance is considered the fastest growing line of business but is the least profitable segment of the market, while engineering is viewed the slowest growing but most profitable line of business.
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The survey found that 60% of respondents expect the GCC insurance market structure to remain stable over the next two years, as shareholder and regulatory pressure for mergers and acquisitions continues to be weak. 40% believe that markets will consolidate, with a number of smaller players disappearing.
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Some 60% of interviewees expect that foreign insurers will gain market share over the next two years, on the back of superior customer focus, distribution know-how and technical skills.
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Views were split 50:50 between those that expect a deepening regional economic integration in the next 12–24 months, and those that do not.
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