Qatar Financial Centre Authority publishes its 3rd GCC Reinsurance Barometer
- Qatar: Tuesday, September 25 - 2012 at 11:57
- PRESS RELEASE
Market sentiment remains upbeat among reinsurers and brokers operating in the countries of the Gulf Cooperation Council (GCC).
In 2011, the combined GDP of the six GCC countries, Qatar, Bahrain, Kuwait, Oman, Saudi Arabia and the United Arab Emirates amounted to $845bn, ranking the region among the 20 largest economies in the world. From 2007 to 2011 the region's economies grew at an average pace of 4% annually, twice as fast as the rest of the world. Insurance markets in the GCC reflect the region's economic dynamics. Between 2006 and 2010, GCC insurance premiums expanded almost five times as fast as the global average. Qatar registered an impressive 12% nominal growth p.a. For 2011, total non-life and life premiums in the GCC amounted to roughly $14.9bn and may reach $18bn by 2013.
Infrastructure and construction spending continues to be the single biggest driver for insurance demand in the region. In Qatar alone, more than $70bn was allocated to infrastructure projects between 2005 and 2011.
Current projects in Qatar amount to $63bn, with a further $108bn in the pipeline for the next three years. As of January 2012, $570bn worth of projects were underway in the region.
Based on these strong economic fundamentals, confidence in the prospects of the reinsurance sector in the GCC and in Qatar remains high as the region continues to be perceived as one of the world's most attractive (re)insurance growth markets, benefiting from a relatively low exposure to natural perils. As in 2011, about two-thirds of interviewees expect that reinsurance exposure and premium volume will grow faster than the region's GDP.
In terms of reinsurance profitability, the survey has revealed a strong turnaround in expectations. Compared to a mere 8% a year ago, 43% of interviewees now expect profitability to improve over the next 12-24 months. This heightened sentiment is based on tighter terms and conditions as well as moderate price increases in the region due to the massive global catastrophe losses in 2011.
The percentage of participants expecting reinsurance capacity in the GCC to grow further has increased from 50% to 54%. The GCC remains an attractive high growth, low-catastrophe market and geographic portfolio diversification is viewed as even more essential following last year's catastrophe losses.
41% of respondents believe that this capacity growth will be driven primarily by regional and Asian capacity, citing continued strong capital formation in the GCC region and Asia.
"The Qatar Financial Centre Authority is committed to promoting reinsurance as a key pillar of Qatar's financial sector development strategy. A healthy reinsurance industry is an important facilitator of economic progress in Qatar and the GCC region. We, therefore, feel encouraged by the most recent Barometer's finding that the attractiveness of Qatar and the GCC as a marketplace for reinsurers continues to increase," says Shashank Srivastava, CEO of the Qatar Financial Centre Authority.
"Economic and associated direct insurance market growth is set to remain well above the global average. In addition, natural catastrophe exposure is moderate, resulting in generally low and stable loss ratios. At the same time, crucial soft factors such as insurance awareness and the sophistication of the sector in the region continue to improve."
Akshay Randeva, Director Strategic Development of the Qatar Financial Centre Authority comments: "The GCC reinsurance market is worth more than $5bn and poised to expand briskly. As a world-class regional financial centre, it is our ambition to continue to support future market growth by attracting talent and expertise and by enhancing the transparency of the market place through additional benchmarks for decision-making. The 3rd GCC Reinsurance Barometer contributes to this objective."
Dr. Schanz, Alms & Company AG, a Zurich-based consultancy, conducted the executive interviews and edited the 3rd GCC Reinsurance Barometer.
Articles in this section are primarily provided directly by the companies appearing or PR agencies which are solely responsible for the content. The companies concerned may use the above content on their respective web sites provided they link back to http://www.ameinfo.com
Any opinions, advice, statements, offers or other information expressed in this section of the AMEinfo.com Web site are those of the authors and do not necessarily reflect the views of Mediaquest FZ LLC. Mediaquest FZ LLC is not responsible or liable for the content, accuracy or reliability of any material, advice, opinion or statement in this section of the AMEinfo.com Web site.