Due to strong growth opportunities the insurance industry in the Gulf Cooperation Council (GCC) region is set to reach $28 billion by 2015. By 2017 experts predict the whole industry to grow to $44 billion.
These figures are based on research, from the Kuwait Financial Centre, Markaz, analysing insurance premium trends across the GCC region. Markaz looked at the Takaful (Islamic insurance), Life, Non-Life, Health, and Reinsurance sectors.
While economic growth has been strong in the region, the insurance sector has lagged behind. Markaz explains the opportunities for local and international insurers are huge, resulting in increased competition, and a challenging business environment.
A lack of awareness and the transient nature of expats are key factors linked to the very low insurance penetration. As of 2012, Markaz reports an insurance (including life and non-life) penetration of just 1.14 percent, compared to the global average of 6.5 percent.
The drivers for the insurance industry in the GCC are seen as rising income levels, a high expat population, greater awareness of the benefits of insurance, and policies enforcing insurance in certain situations.
Health insurance is popular in the region largely due to the introduction of compulsory health insurance schemes. Driven by population growth and greater awareness of health care issues, the medical insurance industry has grown and is now worth around $4.69 billion in terms of premium volume.
The GCC members are looking at insurance regulations in order to upgrade them to international standards, notes Merkaz. There is a lack of uniformity across the region which makes it hard for operators to comply with the regulatory requirements for each GCC state.
Bancassurance, which is selling insurance products via banks, is gaining huge prominence in the GCC. Other popular distribution channels are brokers, online and agents. However, for the industry to grow, insurers need to focus on providing tailored products and distributing them online say experts.