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Rapid growth ahead
ebruary, 2016

Qatar is the fastest growing insurance market with further potential, according to Moody’s latest analysis.

Qatar is the third largest insurance market in the Gulf Cooperation Council (GCC), with total premiums of USD2 billion, approximating to 10 percent of the GCC premiums written.

With a sever-year Compound Annual Growth Rate (CAGR) of 22.4 percent, Qatar has become the fastest growing insurance market in the GCC, followed closely by Saudi Arabia. The growth has accelerated recently with the latest reported premiums representing more than 30 percent growth year-on-year, driven by the implementation of large infrastructure projects to cater for the 2022 FIFA World Cup.

The most important driver of this insurance growth is the rapid economic progress, as shown by a GDP that has more than tripled since 2006. Other growth factors include the government’s substantial focus on infrastructure development and an increasing population, which has doubled since 2006. Finally, to a lesser extent, the advent of motor insurance (third-party) and health insurance as compulsory products has also spurred the insurance market’s expansion.

Despite this rapid growth, Qatar has one of the lowest insurance penetration rates in the region at one percent of GDP, a rate that is significantly below those of most advanced economies, and an insurance density (which implies the per capita USD spend on insurance) of USD944.5, according to the most recent data. This implies that there is room for significant further growth within the Qatari insurance market.

Market Structure

There are 14 insurers operating in Qatar and 17 insurers and reinsurers operate in the offshore-domiciled Qatar Financial Centre (QFC). With these 31 licensed insurance and reinsurance companies, the Qatar insurance market is highly competitive.

National operators resulting in large local groups underwrite most Qatari project risks; the top five insurers [Qatar Insurance Co (QIC), Qatar General Insurance & Reinsurance Co., Doha Insurance Co., Al Khaleej Takaful Group and Qatar Islamic Insurance Co.] enjoy significant market positions, collectively accounting for around 43 percent of the Qatari insurance market (Exhibit 2). When excluding these top five insurers, 2013 average premium per insurer is only USD44 million, albeit the Qatari market is less concentrated than other GCC markets where it is common for the top five insurers to account for 60-70 percent of the market. Moody’s expects the high competition to somewhat ease in the future as the Qatar market grows thanks to the growing infrastructure projects and other growth drivers.

Some of the large Qatari insurers are looking to expand outside Qatar either via external acquisitions, (for example in the case of QIC’s acquisition of Antares Holdings Limited (which has a Lloyd’s Syndicate) ), or by growing organically by setting up operations abroad (for example in the case of QIC, which established a fully-owned Malta-based EU subsidiary, QIC Europe Limited (QEL), to expand in the European Union and other non-EU European jurisdictions6 ).


Unlike other countries in the GCC, the direct channel generates most of the premiums written in the sector. This is because the majority of risks covered in the market is energy and infrastructure projects, and these risks are underwritten directly by national insurers. However major brokers, such as Aon and Marsh, have made inroads given the high growth of the infrastructure market.

Bancassurance is also relatively common as most national insurers are affiliated with local banks, whereas online and phone channels are still in their infancy. In the medium term the broker, online and phone channels are expected to gain position driven by more rapid growth and increased consumer awareness.

Product risk & diversification

As in other parts of the GCC, non-life products dominate the Qatari market with life products accounting for only approximately three percent of the premiums in 2013 (Exhibit 3), as a result of the rapid growth driven by the engineering and energy lines. These lines are of high risk particularly in terms of loss severity, as shown by the volatile claims ratios of the top five national insurers (please refer to appendix).

The remaining insurers compete more actively within the next largest product line, motor, with third-party motor being a compulsory line of business in Qatar, as in much of the GCC. Health insurance is expected to follow the motor growth trend as a result of the, on-going, tiered implementation of compulsory medical cover for nationals, expatriates and visitors.

Asset risk

The Qatari market has relatively lower investment in real estate compared to other countries in the GCC, at approximately eight percent of total investments as at YE2013. However the sector has a very sizeable exposure to equity - both domestic and international equities - at 33 percent as at 2013, with equities being the second largest single asset class for Qatari insurers after deposits.


Furthermore, there are significant related party transactions (through common shareholdings) within investment portfolios, with deposits held with banks and bank equity investments often held with sister banks. These related party transactions are not expected to reduce materially over the next several years.

Reliance on global reinsurers

Due to a lack of scale and an unwillingness to fully expose their balance sheets to large commercial risks, many national players rely on reinsurance for large commercial risks, resulting in low retention rates compared to developed markets, albeit higher than some other GCC markets. With the current rapid growth being driven by infrastructure and energy projects, the low retention levels are relatively unchanged over the past few years (Exhibit 5). This indicates limited risk-bearing capacity, or a possible over-reliance on reinsurers for technical assistance - neither of which are generally regarded as credit positives.

More positively the remainder of the risks (principally motor, health and other wealth management related products) is largely retained by local insurers. Moody’s also notes that reinsurance programmes usually include high-quality counterparts, with well-rated regional and global reinsurers.


The large national insurers are listed as public entities, which results in them having stronger access to the local capital markets than similar privately owned regional insurers. Additionally most of these, as well as the smaller national insurers, are jointly owned by banks, government related entities/individuals, and/or wealthy shareholders. This has resulted in large amounts of equity capital relative to their underwriting risk, as exhibited by the top five national insurers (please refer appendix).


The large national companies exhibited consistent and good returns on capital in 2014 and 2013 (appendix), driven by underwriting large energy and infrastructure projects in Qatar. However, this is not consistent across the industry, as pricing competition for the remainder of the market has driven poor underwriting performance in many of the smaller groups, particularly within the less profitable third-party motor line of business.

Financial flexibility

Similar to most of the GCC insurance markets, Qatari insurers have relatively low or non-existent levels of financial borrowing. In addition, as noted above, national insurers have access to local equity market as a result of their listed status or through wealthy private shareholders. Access to debt markets is likely to be limited to only the very largest Qatari insurers for the foreseeable future.

Operating environment

Qatari insurers are regulated by either of two regulatory bodies. Most national insurers are licensed by the Qatar Central Bank, which in 2013 assumed the role of insurance regulator from the Ministry of Business and Trade. On the other side, insurers operating in the QFC are regulated by the Qatar Financial Centre Authority. These insurers are allowed to write direct risks.

Additionally, a resource-driven economic boom in recent years has produced very high growth rates and boosted per capita GDP at purchasing power parity to the highest level in the world. This growth, together with infrastructure developments ahead of the 2022 FIFA World Cup, should drive future demand for insurance products over the medium term.

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