MENA growth not dampened by Arab Spring
The Arab Spring and political turbulence in some parts of the Middle East and North Africa (MENA) has not dented the long-term prospects for the insurance industry in this area with strong growth still expected on the back of a combination of low insurance penetration and rapidly growing energy, infrastructure and healthcare sectors.
That is the view of Abdul Khaliq R.Khalil, secretary general of the General Arab Insurance Federation, who believes that despite some short term setbacks, the insurance industry in the region remains resilient, and is consequently not overly concerned by the effects of the Arab Spring.
“Arab insurance and reinsurance companies work in dynamic emerging insurance markets that have been shielded from the worst of the global financial crisis, while the disruption caused by the Arab Spring is seen as a short term setback,” he said.
He added that growth opportunities in the Arab world are being supported by numerous factors, including rapid GDP growth (6.8 per cent in 2012); economic policies such as the liberalization of the financial service sectors, which includes reforming the Legal & Supervisory Insurance Systems; a growing population; and major construction and infrastructural projects.
Mahesh Mistry, director of analytics at AM Best, said the problems have slowed insurance growth in the region with growth rates of approximately 5%, down from the double digit growth rates experienced in past years.
But the growth has been more robust than mature markets. “Most MENA countries have experienced growth in 2012, although some have been impacted by the Arab Spring, where growth has been more subdued,” he said. This is particularly true in areas where the unrest has been severe.
He added that following the onset of the Arab Spring there has been a material tightening of policy wording driven by the international reinsurance market to alleviate uncertainty or conflict arising from different definitions being used.
For a more in-depth report on the MENA market look out for the spring issue of Intelligent Insurer.
