Gulf insurance set to cross $31bn mark by 2026

Share
2 min read
As the largest insurance market in the GCC, UAE's GWP share is predicted to rise at a CAGR of 4.1 percent between 2021 and 2026.
Share
  • UAE's GWP share is predicted to rise at a CAGR of 4.1% between 2021 and 2026
  • A CAGR of 1.6% is predicted for Saudi Arabia thanks to Vision 2030 infrastructure plans

Like so many other sectors of economy, Covid-19 lockdown dealt a blow to the insurance sector too in the GCC, hampering its moderate growth that it had been enjoying during the last few years.

But new data put together by Alpen Capital is projecting a hopeful picture of the insurance sector in the Middle East. The market is expected to grow at an annualized growth rate of 3.2 percent, from $26.5 billion in 2021 to $31.1 billion in 2026. Along with the lifting of Covid-19 restrictions, digitization activities by insurers in the region will boost the expansion plan of the insurance business.

The biggest GCC insurance market 

As the largest insurance market in the GCC, UAE’s GWP share is predicted to rise at a CAGR of 4.1 percent between 2021 and 2026, with a market share of 43.7 percent in 2020. Expanding mandatory business lines, increasing regulatory and supervision criteria, and good immigration rules are expected to help its expansion.

A CAGR of 1.6 percent is predicted for Saudi Arabia, the second-largest market, due to the country’s ambitious Vision 2030 infrastructure plans and the expected rebound in the country’s health and automobile insurance markets.

At the same time, Insurance Regulation Unit (IRU) reform, a growing population base, and higher government spending on infrastructure projects are predicted to generate Kuwait’s highest growth at 5.3 percent CAGR in 2020, a relatively small market.

Life and other insurances

The life insurance GWP is expected to increase at a 3.8 percent compound annual growth rate from $3.8 bn in 2021 to $4.6 bn in 2026. However, each country’s growth rate varies according to its predicted population growth.

On the other hand, the non-life insurance market might grow at a rate of 3.1 percent, from $22.7 bn in 2021 to $26.5 bn in 2026.

Economic recovery, the reopening of the tourism sector, and the robust pipeline of infrastructure development projects are all elements that will help the industry grow.

GCC Insurance challenges

If we talk about the insurance’s sector challenges in the GCC during the upcoming years, we might find many; however, the most significant are as follows:

  • Regional insurance revenues have been hit hard by lower oil prices and COVID-19-induced travel restrictions that have resulted in job losses, business closures, and a drop in per capita income. In addition, the decline in automobile and real estate resulted in a growing need for insurance coverage for these assets. As an outcome of the increased uncertainty, infrastructure projects may have been re-evaluated or delayed, harming the expansion of valued insurance assets.
  • Compared to other developed and emerging markets, the GCC has a low level of insurance penetration. An immature life insurance market and limited understanding of insurance products pose obstacles and lower penetration rates than the global average.
  • GCC insurance markets are highly fragmented, resulting in more outstanding fees and discounts on product offerings and reduced profitability due to increased competition.
  • Increased VAT rates in the GCC and the price of complying with new laws may put additional pressure on margins for insurance companies in the area.

 

SPEEDREAD


Today's Headlines

The most important news stories of the day, curated by Post editors and delivered every morning.

Please enable JavaScript in your browser to complete this form.

By signing up you agree to our Terms of Use and Privacy Policy.

MORE FROM THE POST