Kuwait: Market to see fewer players
Source: Middle East Insurance Review | Jun 2017
Six of the 32 insurers operating in Kuwait are predicted to quit the sector shortly for several reasons, including insolvency, according to Mr Yousef Fraih Al Harbi, Chairman and Managing Director of United Insurance.
He pointed out that the insurance market in Kuwait is “on the verge of a disaster” because of the lack of a ceiling on compensation payouts in civil liability cases – a situation that cannot be resolved without new legislation.
This pessimistic picture is painted despite the fact that direct premiums written by the 32 insurers increased by 7.4% to KWD347 million (US$1.1 billion) in 2016 compared to KWD323 million in 2015. Insurers saw total premiums soar by 38% in the fourth quarter of last year.
Mr Al Harbi said that insurers are struggling particularly in the motor business. Premium rates for motor comprehensive and third-party liability insurance have reached irrational low levels due to price undercutting, he said. He warned of the high risk that some insurers might lack liquidity.
Meanwhile, Mr Al Harbi announced that United Insurance has developed plans for a listing on the Kuwait Stock Exchange some time in the next three years. The company also plans to establish three insurance ventures in Europe, Asia and Africa through a strategic partner in Europe.
Mr Al Harbi is not alone in sounding an alert about the insurance market. Earlier, the top man at Wethaq Takaful Insurance called on the authorities to provide more support to the insurance industry and allow Kuwaiti insurers to offer bancassurance so that they can expand and compete at the regional level.
Mr Ibrahim Abbas Othman Sukhi, Chairman of Wethaq Takaful, said insurers in Kuwait are struggling to achieve better market growth. They face significant challenges, including weak government support, weak supervision and regulation of the sector, inadequate technical competencies, poor insurance awareness, and the lack of bancassurance. M
KWD1 = US$3.29