Bahrain insurance sector posts healthy growth in 2005

Gross premiums generated in the domestic market for 2005 amounted to BD94.9 million (US$251 million), an increase of 5.4% over the 2004 figure of BD90.1 million (US$238.4m).

Gross claims, however, surged by 26.8% to BD47.5 million (US$126m) in 2005, from BD37.5 million (US$99.2m) the previous year.

The domestic market comprised 19 insurance companies carrying out direct insurance business in Bahrain in 2005. The companies comprised 11 locally incorporated firms and eight branches of foreign firms.

"The climate for insurance services continues to improve in Bahrain and the region," said Mr. Abdul Rahman Al Baker, Executive Director, Financial Institutions Supervision, at the BMA.

"Robust economic growth, renewed Government investment in large infrastructure projects and strong private sector investment in real estate and other economic sectors are contributing to the expansion of the insurance sector. In addition, increasing public awareness and acceptance about the need for insurance is also contributing to the growing demand for insurance products, both conventional and Islamic."

The growth was also reflected in a healthy increase in employment in the insurance sector. The Bahrain insurance industry employed a total of 1,003 people in 2005. This was an increase of nearly 9% over the 2004 figure of 923. Bahraini nationals accounted for 63% of total employment in the sector.

Bahrain's locally-incorporated insurance firms posted strong gains during 2005, enhancing their market share to nearly 74.8%, from 70.8% in 2004.

Of the total gross premiums, the 11 locally-incorporated firms underwrote BD71m (US$189m), representing a market share of 75% during 2005. This compared with BD63.8m (US$169.7m), representing a 70.8% market share in 2004. The eight branches of foreign firms underwrote the remaining premiums amounting to BD23.9m (US$63.2m) in 2005, compared with BD26.3m (US$70m) in 2004.

Of the total gross premiums underwritten by the all the direct insurance companies operating in Bahrain in 2005, motor, life and fire classes accounted for 72%, compared with 74.4% in 2004.

Motor Insurance

Motor insurance constituted the single largest class of business, generating gross premiums worth BD36.9m (US$98m) in 2005, an increase of 8.5% over the 2004 figure of BD34m (US$90m).

The motor business represented nearly 38.9% of total premiums underwritten in the Bahrain market in 2005, compared with nearly 37.8% the previous year.

The continued growth in motor business was primarily due to the continuous increase in motor vehicles on Bahrain's roads.

Life Assurance

Premiums from life insurance amounted to BD16.6m (US$44m) in 2005, compared with BD18.6m (US$49.5m) in 2004. As a result, life assurance represented 17.5% of insurance business in 2005, compared with 20.7% in 2004.

Life assurance claims totaled BD7.9m (US$21m) in 2005, an increase of 67% over the 2004 figure of BD4.8m (US$12.8m). Life claims represented 16.7% of total claims in 2005, compared with 12.7% in 2004. The surge in life claims was largely due to the introduction of new reporting requirements by the BMA.

Fire Insurance

Fire insurance premiums totaled BD14.8m (US$39.4m) in 2005, an increase of 3.3% over the 2004 figure of BD14.4m (US$38.3m). The fire premiums represented 15.6% of total insurance premiums in 2005, compared with 15.9% the previous year.

Fire claims, on the other hand, more than doubled in 2005 to BD5.6m (US$14.9m), from BD2.6m (US$6.9m) the previous year. As a result, fire claims increased their share of total claims to 11.8% in 2005, from 6.9% the previous year.

Miscellaneous

Miscellaneous insurance comprises medical, personal accident, contractors' risk, liability, money, casualty guarantee, glass and others that fall outside the key classes.

The miscellaneous portfolio registered a 20.6% increase in gross premiums, which totaled BD20.7 in 2005, compared with BD17.2m (US$45.7m) the previous year. Gross claims of this class shrank 6.7% to BD5.8m (US$15.4m) in 2005, from BD6.2m (US$16.5m) the previous year.