An independent study of the Palestine insurance market has confirmed that currently, there is little room for more players in the sector, said media reports citing a statement issued by the Palestinian Insurance Federation (PIF).
The main reason is that the Palestine market is small with limited premium volume. The sector is also suffering from instability due to the absence of a suitable climate and the lack of a favourable infrastructure required for growth and development, according to the PIF statement.
The study, which was commissioned by the PIF, looked into the challenges faced by the insurance sector, its capacity to absorb new market entrants and growth opportunities.
The PIF statement said that the study analysed the technical results of insurers, and found that the market does not have room for new insurers at the moment.
The association said that this finding is consistent with previous decisions and directions of the Palestinian Capital Market Authority to freeze new insurance licences, in addition to its emphasis on the basic criterion relating to the measurement of the ability of any insurance market to absorb the entry of new players. This criterion is that the size of insurance premiums in the market must be equivalent to at least five times the capacity of insurers to meet claim obligations.
Missed opportunities
The study also found that big opportunities in the insurance market are being missed mainly due to a lack of commitment to enforce the insurance law in the motor and workmen’s compensation classes of business. The study results indicated that if the obligation to licence and insure all vehicles registered with the Ministry of Transport and Communications is enforced, and if business owners insure their workers in accordance with the law, the volume of insurance premiums would increase and the market would expand.
The study also indicated that the Palestinian insurance market will see a state of deflation and shrink following the implementation of a revised Social Security Act. This amended law, which increases pensions for workers and gives them more privileges, is expected to be implemented this year. The report expects lower premiums in such classes as health insurance and life insurance, in the wake of the social security changes.
In January, the PIF had said that new insurance licences were unlikely to be issued for a while in Palestine’s crowded market. According to information on the PIF’s website, nine insurers operate in the market. Total premiums was US$174 million in 2015, 1.7% higher than in 2014, according to available data. M