*In 2017-18, Qatar’s insurance market was the best in the GCC and ranked 54th globally on GWP
Qatar, which was the fastest growing insurance market in the Gulf region in 2017-2018, registered gross written premium (GWP) of $3.1bn in 2018, a recent report by Alpen Capital has shown.
Qatar’s GWP growth indicated a compound annual growth rate (CAGR) of 16% from $1.5bn in 2013, Alpen Capital said.
In 2017-18, Qatar’s insurance market was ranked 54th globally based on GWP.
“Robust infrastructural development in the run up to the 2022 FIFA World Cup, a period of elevated oil prices and the country’s growing population have been key factors boosting industry growth, especially within the non-life insurance segment,” Alpen Capital noted.
A government ruling stipulating minimum capital requirements for insurance companies in 2016, improved regulations, controls, risk management, accounting and actuaries’ reports also augured well for the industry, Alpen Capital noted.
In 2014, Qatar recorded a one-time, 82% increase in GWP. This was because of the big-ticket contract awarded to a consortium of five listed insurance companies in April 2014 for the country’s metro rail project.
However, the growth slowed between 2016 and 2017 due to diplomatic issues with some Arab nations, leading to the imposition of economic blockade and withdrawal of investments from the domestic market. Moreover, intense competition in the motor insurance business, the largest insurance line, constrained growth, Alpen Capital said.
The non-life insurance market recorded the “fastest” annualised growth rate of 16.6% over the five-year period to reach $3bn in 2018. In 2017, the share of key non-life insurance business segments such as motor and fire and theft accounted for 22.4% and 9.7%, respectively, of the country’s insurance GWP.
Prior to 2016, the share of motor insurance continued to increase, supported by rising sale of vehicles and mandatory vehicle insurance policy. However, the share of motor, fire and theft and cargo business lines also declined in 2017 due to diplomatic issues between Qatar and the other Arab countries, the report said.
Accounting for 1.6% of the total GWP in 2018, the life insurance segment in Qatar remains “underdeveloped”, with a penetration rate of 0.03% and density of $18, according to Alpen Capital.
On the other hand, the non-life insurance segment “dominated” the industry, accounting for 98.4% of the total insurance GWP in 2018.
Subsequently, the penetration level has risen from 0.7% (in 2013) to 1.6% in 2018 while the density grew at a CAGR of 9.7% over a five-year period.
While the overall penetration rates continue to remain between 1.6% and 1.9%, the density has “declined” over the last two years due to a decline in premiums, it said.
Over the past two years, the Qatar Central Bank (QCB) introduced minimum capital requirements of QR100mn and instructed the country’s insurers to schedule reports on automated systems, in accordance with modern international standards, the report said.
Moreover, the regulator has implemented stringent compliance rules in line with the second strategic plan for the Regulation of the Financial Sector between 2017 and 2022.
Recently, the QCB issued a decree that specifies instructions for licensing, regulation and supervision of insurance-related services, effective from April 2019.
“These new regulations aim to develop the insurance sector by building the required legal framework and protecting the rights of policyholders,” Alpen Capital noted.
