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Bahrain: Insurance to grow 7% annually to $1 bln in 2021

Source: Middle East Insurance Review | Feb 2018

The insurance industry in Bahrain is projected to grow at an annual average of 7.3% from US$0.74 billion in 2016 to $1.05 billion in 2021, according to Alpen Capital.
 
   The growth in life insurance is likely to be bolstered by an anticipated rise in population, while that in non-life will be driven by revenue-diversification efforts, improving business activity and spending on healthcare. 
 
   In addition, a possible introduction of mandatory health insurance, which is under consideration, will give a shot in the arm to the sector.
 
   Presently, with a GWP of $0.74 billion in 2016, Bahrain’s insurance industry is the smallest in the GCC. Also, the Kingdom’s growth has been the slowest in the region at a CAGR of 5.3% since 2011. Its GWP has remained almost unchanged in the last three years, signifying an inactive market.
 
   Life premiums declined during the period and accounted for less than 20% of the total market share. Non-life premiums grew at a CAGR of 6.3% between 2011 and 2016 and formed the largest part (81.1%) of the industry. Growth in this segment was led by a rapid rise in the motor and medical insurance premiums. Subsequently, their respective shares in the total non-life GWP expanded by 2.3 ppts to 35.8% and 7.2 ppts to 28.2% in 2016.
 
   Mandatory third-party motor insurance and a high composition of expatriates who purchase medical insurance to take care of the high healthcare costs validate the high composition of these business lines. Medical insurance is likely to get a boost in anticipation of regulatory changes to make health insurance mandatory for expatriates.
 
   Takaful has a strong base in Bahrain with a share of 22% in the country’s total GWP in 2016. Its contribution is high at over 30% each in medical and motor business lines. Premiums written by takaful providers grew at a CAGR of 6.6% in the five years to BHD60.4 million (US$160.6 million) in 2016.
 
   The country’s insurance industry is home to 36 insurance firms, of which 25 are locally incorporated, including six takaful providers and two each reinsurer and retakaful firms. Foreign insurance providers comprised eight conventional insurers and three reinsurers. 
 
   The competition is intense, but the market is not concentrated, unlike its other counterparts. The top-five players account for only 39.4% of the total GWP and no insurance provider has a market share of over 10%.
 
   While the collective GWP of insurers grew at a moderate pace of 1.4% y-o-y to $740 million in 2016, net profit surged by 41.1% y-o-y to BHD34.0 million. The bottom-line growth was fuelled by a substantial rise in investment income, even as the sector reported an underwriting loss of BHD18.7 million during 2016. The rise in claims and expenses affected the profitability of insurers, said Alpen Capital. M 
 
BHD1 = US$2.66 
 
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