GCC insurance industry to witness renewed growth, predicts…



Dubai: UAE-based investment banking advisory firm Alpen Capital launched its latest GCC insurance industry report on Tuesday, February 8. The report provides a comprehensive overview of the GCC insurance industry and describes the outlook, recent trends, growth drivers and industry challenges. It also profiles some of the renowned insurance companies in the region.

The report was launched during a webinar followed by a panel discussion with Krishna Dhanak, Managing Director, Alpen Capital; Fareed Lutfi, Secretary General, Gulf Insurance Federation; and Aftab Hasan, Chairman, Risk Exchange DIFC Limited. Sameena Ahmad, Managing Director, Alpen Capital, moderated the webinar.

The GCC insurance industry has experienced moderate growth in recent years amid macroeconomic concerns, budget and business spending constraints as well as increased competition within the industry. The COVID-19 outbreak since the start of 2020 has also weighed on the broader industry’s growth outlook. However, the long-term outlook for the GCC insurance industry remains positive and the region’s insurers’ digitization initiatives are not only helping to transform the entire value chain, but also providing an opportunity to keep a leg up. ahead of the competition. These have helped form a solid foundation for the GCC insurance market, which is expected to grow steadily over the next five years.

According to Alpen Capital, the GCC insurance market is expected to grow at an annualized growth rate of 3.2%, from US$26.5 billion in 2021 to US$31.1 billion in 2026. The premium Gross Issued Issues (GWP) of life insurance is expected to grow at a CAGR of 3.8%, from US$3.8 billion in 2021 to US$4.6 billion in 2026. Growth rates in each countries vary according to the projected increase in their population. On the other hand, the non-life insurance segment in the GCC is expected to grow at a CAGR of 3.1% from US$22.7 billion in 2021 to US$26.5 billion in 2026. Sustained population growth, economic recovery, reopening of the tourism sector and a strong pipeline of infrastructure development projects are among the major factors that will facilitate the growth of the sector.

Having the largest market share with 43.7% of the region’s GWP in 2020, the United Arab Emirates is expected to grow at a CAGR of 4.1% between 2021 and 2026. increasing standards of regulation and supervision as well as favorable immigration policies are likely to support its growth. The second largest market, Saudi Arabia, is expected to grow at a CAGR of 1.6% on the back of massive infrastructure development under its Vision 2030, health and motor insurance lines and the expected recovery of commercial activity.

Kuwait, which is a relatively smaller market with a share of 4.3% in 2020, is expected to register the fastest growth with a CAGR of 5.3%, mainly due to reforms in the Insurance Regulatory Unit (IRU), a growing population base and increased government investment. in infrastructure projects.

“GCC insurance sector growth, which has slowed since the onset of the pandemic, is expected to pick up on the back of the expected rebound in the economy, restoring business confidence and strong diversification plans adopted by countries. of the GCC. Moreover, the reopening of the tourism sector and mega-events such as Expo 2020 and FIFA World Cup 2022 are expected to provide an additional boost to growth in the future.

The pandemic has led to a change in consumer behaviors, which has led to a demand for innovative, personalized and practical solutions. This will likely require insurance companies in the region to develop in-house technology capabilities or collaborate with InsurTech companies that can deliver a better customer experience,” says Sameena Ahmad, Managing Director of Alpen Capital (ME) Limited.

The COVID-19 pandemic has forced regional insurers to create a new ecosystem in line with consumer digitization preferences. At the same time, GCC regulators have introduced reforms as part of their broader FinTech strategy, including the adoption of InsurTech. The tightening regulatory environment and rising operating costs are making it increasingly difficult for smaller players to maintain the same level of growth and profitability. This will likely lead to increased consolidation through increased mergers and acquisitions in the market as insurance companies are forced to refocus on building resilience and rethink their risk management strategies.

“M&A activity in the GCC insurance industry remained buoyant in 2020, amid a slowdown in business due to the COVID-19 pandemic. With economies reopening, 2021 has seen some revival in companies, which has led to renewed M&A activity in the region Going forward, the focus is likely to be on value creation opportunities with larger players targeting small to medium players size as well as technology-enabled operators and aggregators. This will not only strengthen the competitive abilities of market players, but also encourage the creation of new products and services in the sector amid weakening profitability,” says Krishna Dhanak, managing director of Alpen Capital.

The report highlights that low awareness of the importance of insurance products and the relatively underdeveloped life insurance market continue to pose challenges for the industry. Declining revenues due to falling oil prices, coupled with COVID-19 induced travel restrictions, job losses, business closures and a subsequent decline in per capita income have put the regional sector insurance under increased pressure and have had an impact on the overall demand for related insurance products. Additionally, the growing uncertainty due to the pandemic has led to reassessment or delays in infrastructure projects, which is likely to affect the growth of valuable insurance assets such as real estate.

Despite the challenges, the outlook for premium growth remains resilient and regional insurance companies are now focused on developing new business models, introducing innovative products, while rethinking services and pricing strategies for the segments. priorities. Such momentum, supported by government initiatives aimed at improving compliance to ensure sustainability, will enable the GCC insurance industry to emerge from the crisis.

About Alpen Capital:

Alpen Capital (ME) Limited is incorporated as a limited liability company in Dubai International Financial Centre, Dubai, United Arab Emirates and is licensed by the Dubai Financial Services Authority. Alpen Capital provides a full range of investment banking advisory services in the areas of mergers and acquisitions, debt, equity and capital markets to some of the largest business conglomerates and financial institutions in the GCC and Asia from South. Besides the United Arab Emirates, it has offices in Qatar, Oman and India.

About Alpen Asset Advisors:

Alpen Asset Advisors Limited is an independent wealth management firm providing private banking and asset management services. It offers a comprehensive offering covering all asset classes, themes and investment styles and sectors. Through our open architecture platform, we identify investment opportunities and design an investment program to achieve wealth creation within the given risk appetite.


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