Optimism despite instability
A combination of low insurance penetration and rapidly growing energy, infrastructure and healthcare sectors means the region comprising the Middle East and North Africa (MENA) holds many opportunities for insurers and reinsurers, as well as specialist brokers.
That is the view of Bilal El-Hoss, senior executive officer at Guy Carpenter (Middle East), who will spearhead a fresh expansion in the region by the broker. The firm recently opened its first office in the Middle East and has received a licence from the Dubai Financial Services Authority (DFSA) to operate as an insurance intermediary in the Dubai International Financial Centre (DIFC).
“There are numerous opportunities for growth in the local insurance market in the MENA region given the relatively low levels of insurance penetration in the territory,” he says. “Our aim is to work with local insurers to help them optimise their treaty structures and also to identify the most effective areas in which to employ facultative reinsurance strategies. The energy, infrastructure and healthcare sectors in the MENA region are among the fastest growing in the world.”
The overall picture is certainly promising. Growth of the MENA re/insurance market continues to be driven by strong economic fundamentals in the region—GDP growth estimates for MENA from the International Monetary Fund were 5.1 per cent in 2012 and 3.6 per cent in 2013. And, as El-Hoss observed, influx of capital into MENA for infrastructure development continues to be robust, with more than $800 billion expected to be invested in the region’s infrastructure projects by 2030.
This rapid accumulation of assets in the MENA region, together with its existing low insurance penetration rates, bodes well for its non-life
re/insurance market growth. Another huge area of potential growth for
re/insurers in the region is the relatively untapped life insurance market, which currently contributes only 20 percent of the region’s premiums.
MENA growth in context
However, it is important to view all this in context. Mahesh Mistry, director of analytics for AM Best, says that insurance growth within the MENA markets has undergone a material slowdown over the last two years, with growth rates of approximately 5 percent, down from the double-digit growth rates experienced in past years. Notwithstanding, the growth has been more robust than in more mature markets.
Middle East & North Africa - Gross premiums written (2005-2012E)
