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The MENA Insurance Barometer 2014 MultaQa Qatar, 11 March 2014 Dr Kai-Uwe Schanz, Author of the Report PowerPoint Presentation
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The MENA Insurance Barometer 2014 MultaQa Qatar, 11 March 2014 Dr Kai-Uwe Schanz, Author of the Report. Participating companies. ADNIC Africa Re Allianz Al Wathba AIG Arabia Insurance Arab Re Arig Arope Asia Capital Re Bahrain Kuwait Insurance C hedid Re Doha Insurance Company.

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slide1

The MENA Insurance Barometer 2014

MultaQa Qatar, 11 March 2014

Dr Kai-Uwe Schanz, Author of the Report

slide2

Participating companies

ADNIC

Africa Re

Allianz

Al Wathba

AIG

Arabia Insurance

Arab Re

Arig

Arope

Asia Capital Re

Bahrain Kuwait Insurance

Chedid Re

Doha InsuranceCompany

Dubai Insurance Group

Hannover Re

Generali

GroupMed

Jordan Insurance Comp.

Marsh

MIG

MilliRe

Misr Insurance

Munich Health

Munich Re

Oman United Insurance

Qatar Insurance Company

PartnerRe

QBE

Saudi Re

SCOR

SEIB

Solidarity Holding

Swiss Re

Tokio Marine

Türker Brokers

United Ins. UAE

United Ins. Yemen

XL

slide3

Introduction

  • Annual MENA Insurance Barometer
  • Based on in-depth interviews with senior executives from 38 insurers, reinsurers and brokers
  • A unique overview of the state of the market and near-term prospects
  • Why does the QFC Authority support market research?
    • Enhance market transparency
    • Provide additional benchmarks for decision-making
    • Promote market professionalism and excellence
    • Further strengthen the QFC’s recognition as a credible and aspiring member of the regional and global industry community
slide4

Key findings

  • 5 key findings from the 2014 ‘MENA Insurance Barometer’
    • Insurance penetration to increase
    • Insurance rates to stabilise
    • Consolidation not on the cards
    • Foreign insurers’ market share to stagnate
    • Takaful to lose steam
how do the 2014 barometer findings compare with last year
How do the 2014 Barometer findings compare with last year?
  • Stronger expectation of increasing insurance penetration levels
  • More positive view on current insurance prices and profitability, in particular for personal lines
  • More confident outlook on insurance prices and profitability
  • Lower expectations of industry consolidation and the degree of foreign competition
  • Significantly less optimistic assessment of the prospects of Takaful insurance
current level of commercial lines rates deemed low
Current level of commercial lines rates deemed low

Commercial lines

Personal lines

  • Personal lines business judged more favourably than commercial lines
  • Gulf region most competitive
  • Abundant reinsurance capacity and growing role of brokers fuel competition
stable pricing outlook
Stable pricing outlook

Commercial lines

Personal lines

Significantly higher 3%

Moderately lower 9%

Moderately higher 27%

  • Stable pricing outlook for the next 12 months
  • More upside in personal lines
fierce rate competition weighs on profitability
Fierce rate competition weighs on profitability

Commercial lines

Personal lines

  • Low levels of profitability reflective of fierce rate competition, higher frequency of large losses and higher cost of doing business
  • Most companies still post relatively low loss ratios and benefit from high reinsurance commissions and recovering investment markets
cautiously optimistic outlook for profitability
Cautiously optimistic outlook for profitability

Commerial lines

Personal lines

Moderately higher 21%

Moderately lower 15%

  • Profitability expectations are flat, with more upside than downside
  • Positive factors include a more favourable investment and regulatory environment
insurance penetration expected to increase
Insurance penetration expected to increase

Expected GDP growth versus premium growth

  • Additional infrastructure projects and compulsory schemes, in combination with advances in distribution, expected to drive premium growth
medical business most dynamic engineering line of business most profitable
Medical business most dynamic, engineering line of business most profitable

Fastest growing

Most profitable

  • Medical insurance expected to be the fastest growing line of business, fuelled by compulsory insurance requirements.
  • Engineering business remains highly profitable due to relatively high barriers to entry and good quality in construction
regulations deemed insufficient
Regulations deemed insufficient

State of insurance regulations

  • Most frequently cited regulatory shortcomings include a lack of solvency margins, cohesion, transparency, consultation and implementation as well as inadequate regulations on insurers’ investments and reserving practices
consolidation not on the cards
Consolidation not on the cards

Expected development of market structure

  • Comfortable capitalization of domestic insurers and family ownership
foreign inroads expected to slow
Foreign inroads expected to slow

Expected development of foreign market share

  • Foreign insurers’ market share held back by high losses and competitive disadvantages in personal lines
broker channel to grow fastest
Broker channel to grow fastest

Fastest growing distribution channel

  • Brokers to benefit from the growing complexity of cover and increasing need for expert advice
  • Banks expected to capture a disproportionate share of rapidly growing life insurance sales
muted outlook for takaful insurance
Muted outlook for Takaful insurance

Takaful versus total market growth

  • Takaful market viewed relatively pessimistically given perceived lack of differentiation
above average real gdp growth in the mena region
Above average real GDP growth in the MENA region

Real average GDP growth

  • MENA 2007-2012 average real growth rate of 4.7% compares with global average of 3.3%
  • Qatar’s GDP growth stands out, primarily reflective of a significant expansion in LNG capacity
  • The region’s total GDP (including Turkey) exceeds US$ 3.6 trillion, exceeding Germany’s

Source: IMF, QFCA

mena region generates more than us 44 billion in premiums
MENA region generates more than US$ 44 billion in premiums

Premiums in US$ million

Source: Swiss Re, QFCA; includes Turkey and Iran

  • The share of life business remains marginal at less than 16%, compared with the global average of 57%
mena insurance markets outgrow gdp
MENA insurance markets outgrow GDP

Life, average real growth, 2007-2012

Non-life, average real growth, 2007-2012

  • Insurance premiums have outgrown GDP (4.7% p.a.)
  • Life business has grown marginally faster than non-life business
  • MENA insurance penetration remains low at 1.3%, a fifth of the global average

Source: Swiss Re, QFCA

country split of mena insurance premiums 2012
Country split of MENA insurance premiums (2012)

Source: Swiss Re

  • The region’s four largest insurance markets - Turkey, Iran, UAE and Saudi Arabia - account for almost three quarters of the total premium pot