Diversification, population growth drive growth in the ins. market

Saudi Arabia is expected to remain the largest ins. market in the GCC region for the foreseeable future after dethroning the UAE in 2022, growing at a compounded annual rate of 5.8% to USD 19 bn between 2023 and 2028, said Alpen Capital in its latest ins. industry report.

Thanks to growing demand: Financial advisory firm Alpen based its projections on the Kingdom’s fast moving infrastructure sector and rising demand for automotive and medical coverage.

The regional market in a nutshell: The market’s gross written premium (GWP) is predicted to grow 5.3% in the medium term (until 2028) to USD 44 bn on the back of diversification efforts and a growing population. The majority of the premiums comprises non-life ins. which is expected to expand 5.4% to USD 40 bn over the same period.

Peer markets: Kuwait’s ins. sector is expected to grow at the fastest clip in the region with a CAGR of 6.4% to USD 2.4 bn by 2028, while the UAE’s will expand at a 4.9% clip to USD 18 bn, Qatar (4.8%), Oman (4.5%), and Bahrain (2.6%).

It’s not without challenges: The report highlights that price competition is likely to erode profit margins and higher passed-on risks to reinsurers are likely to squeeze profitability. Automotive and medical ins. are likely to experience disruptions attributed to hikes in claim costs along with higher taxes.

Technological change: “Insurtech is also enabling insurers to provide customized products that cater to individual needs, leading to a further increase in demand for ins.” said Alpen Capital Managing Director Sameena Ahmed. Insurtech is expected to drive innovation in the sector and boost efficiency, she added.