The value of insurance premiums in the Arab world is likely to double to $10,000 million by 2010, according to estimates by the Bahrain- based Arab Insurance Group (ARIG).
In 1994, the total value of premiums in the region was $5,200 million, says Khalid Rehman, ARIG underwriter and head of engineering for the Middle East and Africa. The forecast is based on a conservative assumption that gross premiums will grow at a rate of 5 per cent a year. ‘If areas like life insurance get going, it could be much more,’ Rehman says. The current annual rate of growth is between 7-10 per cent.
The Gulf will maintain its current 35 per cent share of the Middle East insurance market, according to Rehman’s estimates. However, reinsurance ratios – the proportion of an insurance risk which is reinsured – is likely to fall to about 25 per cent by 2010 from about 33 per cent in 1994.
This gives a figure of just under
$1,000 million for reinsurance premiums in the Gulf in 2010. The reason for this fall is that the insurance industry in the region has grown in recent years and can therefore carry a larger proportion of risks on its own books.
‘Present trends [in the Gulf] are showing a soft market and a trying time for reinsurers,’ Rehman notes, but he adds that long-term prospects are good in a region with no natural disasters, many industrial and commercial risks to be insured and a lot of small insurance companies with limited capacity. Niche markets like Islamic reinsurance, which is currently worth about $150 million for the Arab world, also offer prospects for growth.
ARIG, one of the Arab world’s largest insurance companies, is owned by the UAE, Kuwait and Libya. It plans to bring in private investors via a public offering (MEED 30:8:96).