Qatar vehicle insurance premium set to double to $2.6bn in 2019: BMI

Heavy traffic on Doha Corniche (file). The main driver of non-life insurance will be the surge in motor vehicle insurance premiums fuelled by the double-digit rise in the numbers of passenger cars on Qatar's roads.

Motor vehicle premium in Qatar will more than double to $2.6bn in 2019 on the back of the general growth in the economy coupled with massive infrastructure investments, which BMI Research said, will be conducive for the non-life insurance growth. This year, Qatar’s insurance firms are expected to write motor vehicle premiums worth $1.06bn, BMI said in a report. Last year, motor vehicle premiums totalled $567mn in Qatar. According to BMI, Qatar has posted strong premium growth in 2015 and this “confirms its belief that the Qatari non-life insurance sector is one of the fastest growing segments that we monitor.” Both in 2015 and for the rest of the forecast period, BMI anticipates “dynamic and robust” growth in the non-life segment. The motor vehicle insurance subsector will be boosted by significantly higher volumes and prices in 2015, 2016 and 2017 as the national vehicle fleet grows. The transport insurance subsector will also witness a rise in volumes and prices. The boom in Qatar's economy will be conducive for the non-life insurance growth. Nevertheless, BMI anticipates property insurance prices will decline but the anticipated implementation of compulsory medical insurance for expatriate workers may present a positive upside. At first glance, Qatar's insurance sector resembles those of other Gulf Cooperation Council (GCC) countries. The indigenous insurers are small organisations that are focused overwhelmingly on non-life lines, BMI said. The development of medical insurance is being driven by the introduction of compulsory covers for expatriate workers. Retention ratios are low: the insurers lay off a lot of the risks underwritten with the global reinsurance industry. At times in the past, there have been strong rises in claims. Life insurance is small and is dominated by the distribution of long-term savings solutions to wealthier expatriates by international life companies that have a presence across the region. Takaful insurance accounts for a small minority of activity and is clearly not growing. “However, the differences are important, too,” BMI said and added that the latest reports (2015) from the leading local insurers indicated that it was reasonable to look for growth in total premiums through this year of around 25%. This, it said, was a rapidly growing market. The main driver of the increase will be the surge in motor vehicle insurance premiums. This, in turn, is due to double-digit growth in the number of passenger cars (but not commercial vehicles) on Qatar's roads. BMI also thinks that the overall expansion of the economy in Qatar will boost property and transport premiums. In the case of the former, pressure on prices may be downwards. “We anticipate a surge in motor vehicle premiums that will continue well into 2017 as the size of the national vehicle fleet grows. Over the forecast period, we think that the 2022 FIFA World Cup and heavy infrastructure development efforts associated with hosting the tournament will begin to benefit premiums. It is our estimate that total non-life premiums will be around $4.6bn annually, representing 1.6% of GDP and $1,836 per capita,” BMI said.