Premiums expected to outgrow GDP in MENA
Confidence prevails in the Middle East and North Africa (MENA) insurance markets as insurers expect regional premiums to outgrow GDP and rates to finally stabilise or even start rising.
This is the main finding from the 3rd Annual MENA Insurance Barometer, published by the Qatar Financial Centre (QFC) Authority at its annual flagship conference MultaQa Qatar in Doha.
“According to the MENA Insurance Barometer the region’s strong fundamentals remain intact,” said Shashank Srivastava, CEO and Board Member, QFC Authority.
“Insurance penetration is on the rise, demographics are favourable, and the ability of most Gulf countries to withstand short-term volatility in oil pricing is strong.”
The most recent survey is based on 37 in-depth interviews with senior executives of regional and international re/insurance companies and intermediaries, sharing their assessment of the current state and near-term prospects of the $50 billion MENA insurance markets.
According to the International Monetary Fund, the region’s economy is expected to grow at an annual inflation-adjusted rate of 4.1 percent from 2014 to 2019, slightly ahead of the projected global average of 3.9 percent per annum.
Although political instability prevails in countries such as Iraq, Syria or Libya, conditions in Iran and Egypt, for example, are expected to improve. In the GCC, the current pipeline of investments into infrastructure and construction projects comprises projects in the magnitude of $690 billion (according to MEED) to be awarded from 2015 to 2018.
While the region’s average income per capita is similar to the global level, insurance penetration remains extraordinarily low, with premiums accounting for a mere 1.3 percent of GDP, a fifth of the global average.
This gap is narrowing however, as MENA insurance markets outpace regional GDP growth.
Between 2008 and 2013, total non-life and life insurance premium volumes in the region expanded from about $30 billion to more than $50 billion. Going forward Swiss Re expects premiums to grow at an inflation-adjusted 5.5 percent for 2015 to 2016, higher than the International Monetary Fund’s economic growth forecast for the region.
