Pricing pressure dampens MENA barometer
The Middle East and North Africa (MENA) remains an attractive area for the global reinsurance industry—despite prevailing soft market conditions—said the Qatar Financial Centre at a press conference in Monte Carlo this week.
The newly-released 2015 MENA Reinsurance Barometer reveals that a perceived low exposure to natural perils has helped attract further global and regional reinsurance capacity to the region.
Salman bin Hassan Al-Thani, the chief strategic and business development officer of the Qatar Financial Centre said: “The region’s strengths, namely robust insurance market growth, a vast pipeline of infrastructure and construction projects and a relatively low catastrophic exposure still prevail over the challenges.”
These “challenges” include excess capacity, a lack of technical expertise and political instability.
Low insurance penetration in the region has helped drive growth with premiums accounting for only 1.4 percent of GDP last year—less than a quarter of the global average.
However, moves by the government to introduce compulsory schemes covering motor and healthcare are helping to narrow the gap.
Only 15 percent of executives polled believed that reinsurance premium growth will outpace regional GDP growth over the next 12 months—down from 28 percent a year ago.
However, reinsurance growth is predicted to expand with 91 percent of respondents expecting capacity to grow, but moderately.
Retention levels remain low compared with other markets—on average domestic insurers in the MENA region cede 30 percent of their premium income to reinsurers. Only 42 percent of respondents, down from 62 percent, expect rising retentions over the next 12 months.
The Qatar Financial Centre said that the region remains an attractive high growth, low-catastrophe market with positive effects on overall global portfolio diversity.
The MENA Reinsurance Barometer is an annual survey based on in-depth interviews of senior executives of 32 regional and international insurance companies plus intermediaries and ceding organisations.
