But rate pressure and personal lines concerns act as anchors
Reinsurance capacity is set to grow in the Middle East and north Africa (MENA) region, according to the latest Qatar Financial Centre MENA reinsurance barometer report.
The barometer, published today, said that strong primary insurance market growth and a perceived low exposure to natural perils still lure regional and global reinsurance capacity to the region.
But the report added that pressure on prices and the increasing share of self-retained personal lines business hampered the reinsurance sector’s growth prospects.
Qatar Financial Centre chief strategic and business development officer sheikh Salman Al-Thani said: “The region’s strengths, namely robust insurance market growth, a vast pipeline of infrastructure and construction projects and a relatively low natural catastrophe exposure, still prevail over the challenges.
“Excess capacity, a lack of technical expertise and political instability are major challenges.”
The barometer surveyed senior executives from 32 reinsurance firms, insurers and intermediaries.
The 2015 edition shows that between 2009 and 2014 the region’s total non-life and life insurance premium volume grew from about $32bn to more than $51bn.
Growth was driven by the low insurance penetration in the region, with premiums accounting for just 1.4% of GDP in 2014, less than a quarter of the global average.
However, as the region’s governments introduce compulsory insurance schemes in motor and healthcare the gap is slowly narrowing.
In addition to the expansion of personal lines business, massive spending on infrastructure and construction continues to be the most powerful driver of insurance and reinsurance demand in the region.
More than $1.4tn worth of projects are currently underway in the GCC region alone.
However, only 17% of executives polled still believe that reinsurance premium growth will outpace regional GDP growth over the next 12 months, down from 28% a year ago.
The main reason is continued pressure on rates, along with the rapid growth of personal lines, such as motor and health insurance, which are characterised by lower cession rates.
Nevertheless, 91% of participants expect reinsurance capacity in the MENA region to continue expanding, albeit more moderately than before.
A copy of the report can be downloaded here: http://www.qfc.qa/Documents
No comments yet