By Santhosh V Perumal/Business Reporter

Qatar has become the fastest growing insurance market in the Gulf Cooperation Council (GCC), registering a compound annual growth of 20.7% between 2006 and 2014; even as it presents scope for further growth, global credit rating agency Moody’s has said.
Qatar is also the third largest insurance market in the GCC, with total premiums of $2.2bn, about 10% of the regional premiums written, it said in a report.
“The growth has accelerated recently with the 2013 reported premiums representing more than 48% growth year-on-year and 2014 premiums representing a further growth of over 9%, driven by the implementation of large infrastructure projects to cater for the 2022 FIFA World Cup,” it said.
A more-than-tripling of gross domestic product (GDP) since 2006, government’s substantial focus on infrastructure and a more-than-doubled population since 2006 have been the key factors for the growth, it said.
To a lesser extent, mandatory motor insurance (third-party) and health insurance have also spurred the market expansion.
Nevertheless, Qatar has one of the lowest insurance penetration rates in the region at 1% of GDP, a rate that is significantly below those of most advanced economies, and an insurance density of $979, it said.
“This implies that there is room for significant further growth within the Qatari insurance market,” Moody’s said.
There are 14 insurers operating in Qatar and another 17 insurers and reinsurers in the Qatar Financial Centre. “With these 31 licensed insurance and reinsurance companies, the Qatar insurance market is highly competitive,” it said.
Most Qatari project risks are underwritten by national operators with Qatar Insurance, Qatar General Insurance and Reinsurance, Doha Insurance, Al Khaleej Takaful Group, Damaan Islamic Insurance and Qatar Islamic Insurance accounting close to 45% of the market.
When excluding these insurers, 2014 average premium per insurer is just over $48mn, albeit the Qatari market is less concentrated than other GCC markets where it is common for the top five insurers to account for 60-70% of the market, it said. “We expect the high competition to somewhat ease in the future as the Qatar market grows thanks to the growing infrastructure projects and other growth drivers,” it added.
Some of the large Qatari insurers are also looking to expand outside Qatar either via external acquisitions (QIC acquisition of Antares Holdings) or growing organically (as Malta-based QIC Europe to expand in the European Union and other non-EU European jurisdictions).
Finding that direct channel generates most of the premiums written in Qatar, it said “this is because the majority of risks covered in the market are energy and infrastructure projects, and these risks are underwritten directly by national insurers.”
Bancassurance is also relatively common as most national insurers are affiliated with local banks, whereas online and phone channels are still in their infancy.
“In the medium term we expect the broker, online and phone channels to gain position driven by more rapid growth and increased consumer awareness,” it said.
Finding that high-risk energy and engineering lines dominate the insurance business in Qatar, the report said non-life products dominate the Qatari market with life products accounting for only about 3% of the premiums in 2014.
The remaining insurers compete more actively within the next largest product line, motor, with third-party motor being a compulsory line of business in Qatar.
Health insurance is expected to follow the motor growth trend as a result of the, in-progress, tiered implementation of compulsory medical cover for nationals, expatriates and visitors.
On assets risks, Moody’s found that the Qatari market has relatively lower investment in real estate compared to other countries in the GCC, at about 8% of total investments as at 2013, which “we view favourably.”
However the sector has a very sizeable exposure to equity - both domestic and international equities – at over 33% as at 2013, with equities being the second largest single asset class for Qatari insurers after deposits.


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