The insurance markets of the Middle East and Northern Africa are expected to continue to outgrow the region’s GDP over the next 12 months, according to the MENA Insurance Pulse 2018, published by Dr. Schanz, Alms & Company.
Personal lines remain the key driver for premium growth, with primary insurers benefiting from compulsory insurance requirements as well as regulatory actions supporting rates, the report noted.
Although the executives interviewed anticipate that geopolitical instability and economic headwinds will continue to weigh on the industry’s outlook, price adequacy in commercial lines, especially in property business, has improved, mainly in response to severe fire losses.
Insurance executives view current prices in the MENA region’s commercial and personal lines businesses as being at or above the average of the past three years. In addition, a vast majority expects rates in commercial and personal lines to remain stable or increase further over the next 12 months. Commercial and regulatory pressure for at least stable prices will continue.
Overall, personal lines are expected to outperform commercial lines as regulatory pricing actions and the enforcement of compulsory insurance schemes, like motor and medical, have a strong effect on both premium growth and rates.
The 6th edition of MENA Insurance Pulse, an annual survey among insurers, reinsurers and brokers operating in the region’s $58bn primary insurance markets, is based on in-depth interviews with 45 senior executives. Launched at the 32nd General Conference of the General Arab Insurance Federation (GAIF) which took place from 24–27 June in Tunisia, the study was supported by AIG, PartnerRe and Tunis Re.
Mr Henner Alms and Dr Kai-Uwe Schanz, the study’s authors, said, “The region’s strong insurance premium growth is still considered the market’s most important strength, followed by significantly modernised regulatory regimes and a relatively moderate natural catastrophe exposure.
“Going forward, markets are expected to structurally benefit from the region’s still low insurance penetration, which is a mere quarter of the global average. Further, digitisation will contribute to reduce operating and acquisition expenses and enhance the appeal of insurance products to the region’s large young population.” M