MENA region resilient despite regional worries, claims survey
The insurance industry in the Middle East and North Africa (MENA) region will ride out some stormy weather caused by a number of economic concerns, according to a survey by the Qatar Financial Centre (QFC).
The survey, the MENA Insurance Barometer 2016, is an annual snapshot of the market. This year’s survey was unveiled at the MultaQa Qatar 2016 conference, which is taking place this week in Doha, Qatar.
According to the survey despite slowing economic growth and growing geopolitical instability those surveyed were still optimistic about the area, with 61 percent of those polled saying that they expect regional premiums to outgrow gross domestic product (GDP).
Personal lines business was expected to grow due to broadening and deepening compulsory insurance requirements in the region, as well as corrective pricing and reserving measures.
However, commercial lines such marine and engineering have been affected by economic headwinds and fiscal tightening and are expected to face harder times.
The MENA region’s level of low insurance penetration is expected to be a key opportunity for the industry, according to the survey, as the ratio of premiums to GDP is currently a quarter of the global average.
There were also some key differences in opinion from the 2015 QFC survey. Last year, 19 percent of respondents said that they expected consolidation in the industry in the region. This year that figure has almost doubled to 36 percent.
Moreover, 36 percent of those surveyed this year said that they expected that foreign insurers would lose or give up market share over the next 12 months, a big increase on the 11 percent who said the same thing in 2015.
Finally 34 percent said that they expected that takaful insurance would underperform over the next year, again up from the 22 percent who made the same prediction in 2015. Many of those surveyed said that takaful insurance offered no genuine differentiation and competed primarily on price. However, they did say that if properly applied takaful insurance was still valid and promising.
“On the back of the sector’s above-average growth performance, insurance is set to further increase its share in MENA economies. This is the main finding of the most recent edition of the MENA Insurance Barometer, which we have been publishing since 2013,” said Yousef Mohamed Al-Jaida, chief executive officer of the Qatar Financial Centre (QFC).
“A greater role of insurance in absorbing and transferring risk is a welcome development. It generally goes hand in hand with more risk-conscious behaviour of individuals and companies as well as deeper and broader domestic capital markets.”
