Qatar- Mena region ideal destination for reinsurance industry

Date

9/17/2015 1:25:07 AM

(MENAFN- The Peninsula)

DOHA: With more than $1.4 trillion worth of projects currently underway in the GCC region alone the Middle East and North Africa (Mena) is expected to remain an attractive destination for the global reinsurance industry.

According to the 2015 Mena Reinsurance Barometer published today strong primary insurance market growth and a perceived low exposure to natural perils still lure further regional and global reinsurance capacity to the region.

However unabated pressure on prices and the increasing share of largely self-retained personal lines business weigh heavily on the reinsurance sector’s growth prospects.

“Reinsurance capacity is expected to further expand in the Mena region. This is the main finding of the Mena Reinsurance Barometer which we have been publishing since 2011” says Sheikh Salman bin Hassan Al Thani Chief Strategic and Business Development Officer of the Qatar Financial Centre.

“The region’s strengths namely robust insurance market growth a vast pipeline of infrastructure and construction projects and a relatively low natural catastrophe exposure still prevail over the challenges. Excess capacity a lack of technical expertise and political instability are major challenges for the region.”

The Mena Reinsurance Barometer is an annual survey based on in-depth interviews. In 2015 senior executives of 32 regional and international reinsurance companies ceding companies and intermediaries operating in the Mena region were interviewed.

The 2015 edition shows that between 2009 and 2014 the region’s total non-life and life insurance premium volume expanded from about $32bn to more than $51bn. Growth is driven by the low insurance penetration in the region with premiums accounting for just 1.4 percent of GDP in 2014 less than a quarter of the global average. However as the region’s governments introduce compulsory insurance schemes in motor and healthcare the gap is slowly narrowing.

In addition to the expansion of personal lines business massive spending on infrastructure and construction continues to be the most powerful driver of insurance and reinsurance demand in the region.

However only 17 percent of executives polled still believe that reinsurance premium growth will outpace regional GDP growth over the next 12 months down from 28 percent a year ago. The main reason is continued pressure on rates in combination with the rapid growth of personal lines such as motor and health insurance which are characterized by lower cession rates.

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