Posted on March 11, 2014

Growth rates in the insurance markets of Gulf Cooperation Council (GCC) countries remain higher than those of developed markets and have kept pace with those of some key emerging markets according to a new report from A.M. Best.

A.M. Best’s report, titled, “GCC Growth Outpaces Developed, Other Emerging Markets”, analysed an extensive portfolio of companies in 19 countries over the past nine years, comparing the GCC markets of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates with developed markets and those of the BRIC (Brazil, Russia, India and China) countries. Gross premiums written (GPW) in the GCC countries had a compound annual growth rate (CAGR) of 21% from 2002 through 2012, the same as Brazil and China, while Russia was at 18% and India at 16%.

Mahesh Mistry, director, analytics, said: “Interestingly, growth of GPW in the GCC markets continued to accelerate from 2010, and despite depressed financial markets, the GCC insurance sector is continuing to outpace most other markets in the analysis.”

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While far fewer companies operate in emerging markets, developed markets are seen to be much more congested. However, developed markets have far more companies with niche strategies focusing on specific products or segments. By contrast, most companies within smaller, emerging markets tend to compete across all segments and product lines, creating intense competition across all market segments.

General economic growth and public spending in the GCC are likely to increase in the short to medium term, providing further impetus for the insurance market. However, much of the recent growth in insurance has come from compulsory covers.

Vasilis Katsipis, general manager, market development – MENA, South & Central Asia, added: “Companies have taken high growth rates as a given, but governments are running out of opportunities to rely on compulsory business to stimulate the market. In this environment, premium growth is likely to be more subdued than the historical highs, which in turn puts more pressure on insurers to segment the market and identify strategies for growth.”

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