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Doha holds conference on insurance markets
According to the annual MENA Insurance Barometer, insurers expect regional premiums to outgrow GDP rates and stabilise or start rising.
The Barometer findings were revealed ahead of MultaQa Qatar insurance conference. The two-day event discusses current trends and developments in the MENA insurance market, which is valued at US$ 50 billion.
Insurance experts in the Middle East and North Africa (MENA) expressed their confidence in insurance markets in the region and their ability to recover in the coming months.
Deputy Chief Executive Officer of the QFC Authority, Yousuf Al-Jaida, told reporters at a press conference revealing the barometer findings, that although the region's average income per capita is similar to the global level, the MENA countries still lag behind their western counterparts in insurance penetration rates.
Al-Jaida saw this gap as an opportunity for growth rather than a weakness.
"Penetration rates in western countries are estimated at 6%, while in Qatar and other countries in the region it's 1%. This is an indication of a huge potential for growth," he said.
Al-Jaida attributed this difference to several reasons, including low natural disaster rates and the scarcity of some insurance products like life insurance.
However, he was optimistic that insurance premiums could grow with the growth of GDP.
"If we look at Qatar, the GDP growth rate ranges between 5 and 6%. This is an indication that insurance premiums could grow by the same rate, if the products increased and effort was done to improve the regulatory environment," he said.
According to the barometer, between 2008 and 2013, total non-life and life insurance premium volumes in the region expanded from $30 billion to more than $50 billion.
Still, insurance penetration remains low compared to global average.
Chairman of MultaQa and President of Dr Schanz, Alms & Company, Dr. Kai-Uwe Schanz, attributed this difference mainly to the low rate of life insurance in the region compared to other parts of the world.
Schanz said this is mainly because insuring against the risk of premature death is something that is not culturally accepted in the region as elsewhere.
"In other parts of the world, governments are not as generous as here in the gulf region. So, people have to buy life insurance to protect themselves and their families, because they cannot rely on governments," he said.
Schanz said that life insurance in the region is very underdeveloped as it accounts for 10 to 15% of the total insurance market, whereas in other countries it accounts for 50 to 60%. A situation he thinks is unlikely to change soon.
"Efforts are underway to develop life insurance products which try to overcome the cultural religious concerns of policy holders here in the region. That's an ongoing development. Over time, I'm convinced it will help close the gap, but it will take time. It will be a gradual process. Not something that I would expect over the next two to three years," he said.
Moreover, governments of the Gulf region offer very generous benefits for retirement. The conference concludes on Tuesday.
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