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Qatar insurance sector set for growth
February, 2016

Multaqa 2015 was a platform for various stakeholders in the industry to network and glean information on the industry.

Qatar’s current level insurance market penetration shows immense opportunities for future growth, said QCB governor Sheikh Abdulla bin Saud Al Thani. He was speaking at the Multaqa 2015 conference held recently.

Giving the keynote address, the governor said Qatar’s current level of penetration of 0.5 percent had room for expansion. “1.6 pc is the share of the insurance sector as part of the global business sector. This very small percentage can be seen as a revealing factor of great opportunies.”

He also emphasised the essential role of insurance in protecting businesses and society alike from the potential harm of sudden losses, while also contributing to broadening and deepening capital markets, a role particularly relevant to the MENA region.

The event was also a platform for Lloyd’s, the global insurance marketplace, which currently writes business of around USD70 million in Qatar. 
“What we are trying to do now is to capture those markets where Lloyd’s hasn’t traditionally been strong, which are those in the high-growth. We see Qatar as a high-growth market with the insurance sector in the (Gulf) region expected to grow 18% in the future,” said Inga Beale, CEO of Lloyd’s.

Lloyd’s Qatar portfolio are mainly across the marine, energy and property classes, while it also covers other classes such as construction, political risk, trade credit, casualty, professional risks, aviation and contingency.
Highlighting the strength of Lloyd’s relationship with Qatar, she said in June last year, Qatar Insurance Company (QIC) had acquired Antares Holding, a specialist insurance and reinsurance group operating in the Lloyd’s market.

The winner of the 2015 essay competition was announced at the event. The contribution “From breakneck premium growth to sustainability and sanity: how market discipline can be strengthened” by James Portelli, was selected by an international jury of insurance experts.

MENA Insurance Barometer

The MENA region remains attractive with lots of opportunities for the insurance industry despite a challenging political and economic environment that is facing declining oil prices and ongoing instability in many parts of the region.

Based on interviews with 37 industry professionals the Qatar Financial Authority published its findings that included this outcome in the Insurance Barometer 2015, at the Multaqa event this year.

Economic growth is expected to reach 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. Political instability prevails in countries such as Iraq, Syria or Libya, but conditions in Iran and Egypt, for example, are expected to markedly improve compared to previous years. In the GCC, the current pipeline of investments into infrastructure and construction projects comprises projects in the magnitude of USD690 billion (according to MEED) to be awarded from 2015 to 2018.

Insurance executives polled in the MENA Insurance Barometer remain confident in the future of the MENA insurance markets. Around 70 percent of interviewees expect regional premiums to outgrow GDP. Survey participants are particularly bullish about personal lines business which, in addition to compulsory insurance requirements, benefits from regulatory action. Over the next 12 months, sliding oil prices are not expected to have any material adverse impact on infrastructure and construction projects in the Gulf.

Participants continue to consider the region’s strong economic and direct insurance market growth as its most important current strength, followed by a massive pipeline of major infrastructure and construction projects and the region’s relatively moderate natural catastrophe exposure.

Personal lines are viewed as the key future opportunity of MENA insurance markets, due to population growth, legislation and partially improving rates. Low penetration levels are the third most frequently mentioned opportunity. For the wider MENA region, the average share of premiums (non-life and life) in regional GDP is about 1.3 percent, compared with 6.5 percent for the world as a whole.

The Barometer found that 86 percent and 34 percent of executives polled view current prices in MENA commercial and personal lines business. 81 percent and 89 percent, respectively, expect commercial and personal lines rates to remain stable or improve over the next 12 months, very similar to last year. Only 19 percent of respondents anticipate MENA insurance markets to consolidate over the next 12 months, compared with 16 percent a year ago. Solid levels of capitalisation and family ownership are major obstacles to consolidation. Regulators are widely viewed as the only likely catalyst for consolidation over the longer run.

Only 32 percent of executives interviewed expect that foreign insurers will gain market share over the next 12 months.

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