By Ed Attwood
But, penetration rates in some countries still worryingly low, new research claims.
Insurance premiums in the GCC rose by 28 percent in 2009 to $10.6bn, although penetration rates in some countries are still worryingly low, new research has claimed.
The report, from management consulting outfit Value Partners, also points out that local insurers are dominating the sector, with their share of the market ranging from 77 percent in the UAE to 90 percent in Qatar. This is due to relatively recent legislation allowing the market to open to competition.
“The region’s insurance growth rate sounds impressive; however, it is not nearly as large as it should be,” said Santino Saguto, managing director of Value Partners Dubai office.
“Insurance penetration, for example aggregate insurance premiums over GDP, stands at 1 percent for the GCC countries. In contrast, the developed insurance markets in the US and Europe register penetration rates in the range of 5-15 percent.
Saguto added that Saudi Arabia’s penetration rate is a tiny 0.6 percent, which is dwarfed by that of the UAE at two percent.”
In terms of the various insurance classes, car insurance is highest, followed by health and property, with life insurance the weakest.
“GCC residents seem to buy insurance products only if they have to. It is not by coincidence that mandatory third party motor insurance is the leading class,” continued Saguto.
“All other non-life insurance classes, health included, are almost 100 percent corporate business. GCC nationals expect their governments to cover most risks for them, the majority of health care is free and provided by the government, and home loans are often state-guaranteed, without the need for building insurance.”
The report also indicated that health insurance had the best growth prospects, due to a tendency among GCC governments to add mandatory insurance for expatriates.