Qatar's insurance industry is expected to grow more than 9% to reach $4.6bn by 2021 as rising population continues to drive the demand for health, motor, property and other retail cover; while strategic economic diversification plans help enhance the base of assets available for underwriting, according to Alpen Capital.
The insurance industry's gross written premium (GWP) is expected to be $4.6bn by 2021 compared to $3.1 this year and $2.9bn in 2016, the Alpen Capital report said.
Highlighting that the country's population has grown at a fast pace of 8.6% between 2011 and 2016 to 2.6mn and is slated to grow at a compound annual growth rate (CAGR) of 1.5% until 2021, it said the growth is driven by increasing number of expatriate workers moving in for job prospects.
"Rising population, comprising the young and working, will continue to drive the demand for health, motor, property and other retail insurance products," it said, forecasting the country's population to touch 2.8mn by 2021.
The key players in Qatar's risk cover sector are Qatar Insurance with GWP of $2.66bn during 2016, followed by Qatar General and Reinsurance ($173mn), Doha Insurance ($141.6mn), Al Khaleej Takaful ($82.8mn) and Qatar Islamic Insurance ($64.5mn).
Finding that the International Monetary Fund has projected Qatar's gross domestic product per capita to increase at a CAGR of 5.4% between 2016 and 2021, the report said efforts to diversify revenue and a gradual recovery in oil prices are likely to result in an increase in disposable income of one of the world’s wealthiest countries. “This will add to the demand for general insurance products," it added.
Qatar's GDP growth (at current prices), estimated to have fallen 5.4% in 2016, is slated to be at 6.8% this year and forecast at 6.5% by 2021; while GDP per capita (at current price) are estimated to be $59,513, $60,812 and $77,311 in 2016, 2017 and 2021 respectively.
On the infrastructure developments, Alpen Capital is of the view that strategic plans to diversify economy have given rise to construction activities related to infrastructure, commercial and retail projects and hosting of the FIFA World Cup in 2022.
"Such projects are likely to increase the base of assets available for underwriting," the report said, adding the country insurance penetration and density are expected to be at 2.1% and $1,628.1 by 2021 compared to 1.9% and $1,146 respectively this year.
Alpen Capital noted that in 2016, the Qatar Central Bank issued new regulations for insurers on licensing, controls, accounting, risk management and actuaries’ reports. The new laws also stipulated minimum capitalisation levels and limits on risky asset classes. "Such regulations will improve solvency of the companies and build a sustainable industry," the report said.
In November 2017, Qatar Insurance renewed its branch licence in Abu Dhabi even amidst the diplomatic rift, while Qatar Re, a subsidiary of Qatar Insurance, raised $450mn through an issue of perpetual bonds at an initial yearly coupon of 4.95%, the proceeds of which would be utilised for financing the future growth.
Last updated: December 17 2017 10:04 PM
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
QFC, Agaoglu sign MoU to support Qatar-Turkey business, trade relations
Qatar Airways bags award for IATA safety audit feat
‘Milaha stays committed to expanding presence in India’
Saudi seeks oil as high as $100 ‘to support Aramco IPO plan’
Ahlibank net profit rises 3.6% to QR176.1mn in first quarter
Pound bulls get reality check as slowing inflation hits BoE bets
Japan exports disappoint on strong yen, trade friction
China fans trade row with hefty deposit on US sorghum imports
UK inflation drop muddies outlook for interest rates