GCC insurance industry to witness a pickup in growth, forecasts, says Alpen Capital

The GCC insurance industry has witnessed moderate growth in recent years amid macroeconomic concerns, constrained fiscal and business spending as well as intensifying competition within the industry.



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A Staff Reporter

Published: Tue 8 Feb 2022, 11:03 PM

Last updated: Tue 8 Feb 2022, 11:06 PM

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

The report was launched over a webinar followed by a panel discussion featuring 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 witnessed moderate growth in recent years amid macroeconomic concerns, constrained fiscal and business spending as well as intensifying competition within the industry.

The outbreak of Covid-19 since the start of 2020 has also weighed on the growth prospects of the broader industry. However, long-term prospects of the GCC insurance sector remains positive and digitisation initiatives by insurers in the region are not only helping in transforming the entire value chain but also providing an opportunity to stay ahead of competition. These have helped in forming a strong base for the GCC insurance market, which is set to steadily grow over the next five years.

According to Alpen Capital, the GCC insurance market is projected to grow at an annualized growth rate of 3.2per cent from $26.5 billion in 2021 to $31.1 billion in 2026. The life insurance gross written premium (GWP) is projected to grow at a CAGR of 3.8per cent from US$ 3.8 billion in 2021 to US$ 4.6 billion in 2026.

“Growth of the GCC insurance industry which slowed down since the onset of the pandemic is expected to pick up on the back of projected rebound in the economy, reviving business confidence and robust diversification plans adopted by the GCC nations. Moreover, reopening of the tourism sector and mega events such as the Expo 2020 and the FIFA World Cup 2022 are likely to provide additional boost to growth going forward," said Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.

"The pandemic has brought a shift in consumer behaviours leading to demand for innovative, customised and convenient solutions. This is likely to compel insurance firms in the region to either develop in-house technological capabilities or collaborate with InsurTech companies that can deliver improved customer experience.”

Growth rates across each country vary based on their projected population increases. On the other hand, the non-life insurance segment in the GCC is estimated to grow at a CAGR of 3.1per cent from $22.7 billion in 2021 to $26.5 billion in 2026. Sustained increase in population, economic recovery, reopening of the tourism sector, and strong pipeline of infrastructure development projects are among the leading factors that will facilitate growth in the sector.

Having the largest market share with 43.7 per cent of the region’s GWP in 2020, UAE is expected to grow at a CAGR of 4.1per cent between 2021-2026. Expansion of compulsory business lines, growing standards of regulation and supervision as well as favourable immigration policies are likely to support its growth. The second largest market, Saudi Arabia, is expected to grow at a CAGR of 1.6 per cent led by massive infrastructure development as part of its Vision 2030, health and motor insurance lines and expected recovery in business activity.

“M&A activities across the GCC insurance sector remained buoyant during 2020, amid downturn in activities due to the Covid-19 pandemic. As economies reopened, 2021 witnessed some revival in businesses leading to M&A activities stirring up again in the region. Going forward, focus is likely to be directed towards value creating opportunities with larger players targeting small to mid-sized players as well as tech-enabled operators and aggregators. This will not only strengthen the competitive capabilities of the players in the market but also encourage the creation of newer products and services in the sector amidst weakening profitability,” said Krishna Dhanak, managing director at Alpen Capital. — business@khaleejtimes.com


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