By Anil Bhoyrul and Safura Rahimi
The region's booming economy means big opportunities for insurance groups, says report.
The insurance market in the GCC could be worth up to $20 billion if the world average insurance premium of $550 per capita is achieved, reveals a Standard & Poor's (S&P) report this week.
The report says the Middle East is emerging as a highly dynamic insurance market, as attitudes towards the sector shift and consumers look for a wider variety of financial products to support their long-term interests in the region.
However, the penetration of all forms of insurance is low by global standards: European countries typically average around 10% for life insurance, for example, while countries in the Middle East hover around the two per cent mark.
The Standard & Poor's study suggests that the current market is valued at around US$4.6 billion, but points out that economic growth in the region, coupled with a sizable, underinsured population, is creating major opportunities both for local and global insurance groups.
One example of the increasing dynamism of the sector is the collaboration between Nexus, the region's largest independent financial advisor (IFA), and American Life Insurance Company (ALICO) AIG Life.
Following a distribution agreement in February 2007, Nexus has added a range of ALICO's life, critical illness and accident insurance products to its panel. In close cooperation, both Nexus and ALICO are committed to building on the success of the first quarter.
"We're seeing both increased demand and increasing sophistication in markets throughout the region, and the collaboration with ALICO AIG Life has helped us to offer a wider portfolio of best-of-breed products," said Mahmoud Nodjoumi, owner and CEO of Nexus.
"In particular, the availability of critical illness and accident insurance through Nexus has been welcomed by our clients, who look for greater peace of mind for themselves and their families," he added.
Speaking to ArabianBusiness.com, Nodjoumi added: "Our ambition is to create an internationally-recognised financial services brand born within this region. This research from Standard and Poor's demonstrates what Nexus has known since our inception: that the Middle East's insurance sector has massive potential in terms of rising demand and increased customer interest.
"We're seeing big demand from high net worth individuals and also companies who are looking to take out insurance policies for their staff. This demand is particularly apparent in the health and critical illness sector, so both industry and individuals will benefit from Nexus offering a wider product range in this area."