GCC insurance market set to grow $36.1bn in 2024

Dubai / Emirates Business

Alpen Capital Limited, Dubai-headquartered investment banking advisory firm, announced the publication of its latest report on the GCC Insurance Industry for the year 2019. The report provides a comprehensive overview of the GCC insurance sector and outlines the recent trends, growth drivers and challenges in the sector. It also profiles some of the prominent insurance companies in the region.
As per the reports, the GCC insurance market is projected to grow at a CAGR of 4.3% from $29.2 billion in 2019 to $36.1 billion in 2024. Sustained economic growth, increase in population and substantial infrastructure development are among the leading factors that will facilitate growth of the sector. Additionally, governments’ efforts to strengthen regulations, introduce mandatory lines and diversify the economy are also likely to drive GWP for the insurance industry.
The gradual slowdown of the insurance industry witnessed over the past two years is likely to continue until 2024. However, GWP is expected to improve relative to subdued levels of growth recorded in the recent past, as long-term growth prospects continue to remain positive.
Insurance penetration in the region is expected to remain between 1.8% – 1.9% from 2019 – 2024, below the global average of 6.1%, offering scope for growth in the sector. Insurance density in the region is expected to increase from $502.9 in 2019 to $555.8 in 2024.
Life insurance GWP is projected to grow at a CAGR of 4.9% to reach $4.7 billion in 2024. Growth rates across each country vary based on their projected population increases. On the other hand, the non-life insurance market is expected to grow at a CAGR of 4.3%, primarily aided by mandatory insurance business lines, new regulations improving the pricing of policies, anticipated recovery in economic activity, and subsequent rise in infrastructure investments. The non-life segment will continue to comprise 86.9% of the total insurance market at $31.4 billion in 2024.
Between 2019 and 2024, insurance market in UAE and Saudi is anticipated to grow at a CAGR of 4.2% and 5.0%, respectively. In UAE, infrastructure spending and phased introduction of mandatory health insurance will drive overall growth in the sector. Saudi Arabia is expected to benefit from significant infrastructural developments, coupled with new business, reformed tourism program.
The GCC insurance industry landscape is maturing as regional governments are consistently seeking to enhance the regulatory environment to improve compliance and create sustainable business models.

Furthermore, a rapid increase in the number of women drivers, which is likely to grow by 3 million in 2020, is expected to facilitate growth of Saudi’s insurance segment.
Across the GCC, Kuwait is anticipated to grow at the fastest annualised average pace of 8.2%. The market share of each GCC country is expected to remain constant through 2024.
“The GCC insurance industry which maintained a positive momentum over the years, witnessed a slowdown in GWP’s due to sluggish economic conditions during 2016 and 2018. However, going forward, we anticipate the GCC insurance sector to grow at a moderate pace owing to economic revival, growing population, strengthening regulatory reforms and continued implementation of mandatory insurance coverage. Infrastructure development, in line with upcoming mega events, are expected to further aid growth in the segment.” says Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.
“We expect the GCC insurance industry to witness a moderate growth in accord with improving fiscal activity and macro-economic factors. Additionally, governments’ proactive economic and liberalization reforms, and efforts to strengthen the regulatory environment, will support growth in the sector going forward. Steady rise in population coupled with the increase in senior population within the region is expected to boost premiums of the health segment.
The M&A sphere in the GCC insurance sector has remained active over the past two years with several intra-regional and cross border transactions as companies seek to build stronger balance sheets in order to sustain the stringent reserve and solvency requirements. In addition to interest from foreign players, we expect to see continuing M&A activity as companies develop technological capabilities to broaden their product offering and improve profitability.”, says Krishna Dhanak, Executive Director at Alpen Capital.
As part of economic recovery efforts, regional governments have made higher budget allocations and undertaken a series of measures to improve the business environment and boost demand in key sectors. Sectors such as tourism, aviation, retail, hospitality, real estate and construction, alongside significant infrastructure spending in the run up to Expo 2020 and World Cup 2022, will provide a boost to the regional economies. GDP (at current prices) across the GCC is anticipated to grow at a CAGR of 3.3% between 2019 and 2024.
GCC nations have adopted long-term national strategies to diversify their economies away from the hydrocarbon sector, leading to increased construction activities. Currently, the value of total active projects in the GCC is estimated at $2.6 trillion, which will increase the amount of insurable assets over the long-term. Additionally, GCC nations have introduced liberalization reforms such as opening up sectors for 100% foreign direct investment and easing visa regulations for tourists and expatriates, which would aid growth of the insurance industry.

Health insurance remains one of the most important business lines in the GCC and will continue to drive the insurance market across the region. Currently, GCC countries are each at different stages of rolling out mandatory health insurance, which is likely to come into effect in 2020. Similar regulatory changes across the GCC region will be a fundamental factor for growth of the insurance sector.
Steady rise in population base, comprising of the youth and working population, will boost the demand for life, motor, health and property insurance products across the GCC. Moreover, the increase in senior population (age > 50 years) is expected to boost premiums of the health segment.
Strengthening regulatory environment and supervisory standards will improve compliance standards in accordance with the best international practices and lead to sustainable business models.
The GCC insurance industry landscape is maturing as regional governments are consistently seeking to enhance the regulatory environment to improve compliance and create sustainable business models.