The long-term prospects of the GCC insurance sector remain positive and digitalisation initiatives by insurers in the region are not only helping in transforming the entire value chain but also providing an opportunity to stay ahead of competition, said the UAE-based investment banking advisory firm Alpen Capital.
In its latest ‘GCC Insurance Industry’ report released on 8 February, Alpen Capital said that these factors have helped to form a strong base for the GCC insurance market, which is set to steadily grow over the next five years.
According to Alpen Capital, the GCC insurance market is projected to grow at an annualised rate of 3.2% from $26.5bn in 2021 to $31.1bn in 2026. Life premiums are projected to grow at a CAGR of 3.8% from $3.8bn in 2021 to $4.6bn in 2026.
The non-life segment in the GCC is predicted to expand at a CAGR of 3.1% from $22.7bn in 2021 to $26.5bn in 2026. A sustained increase in population, economic recovery, the reopening of the tourism sector and a strong pipeline of infrastructure development projects are among the leading factors that will facilitate growth in the sector.
The prospects are bright despite the fact that the GCC insurance industry saw moderate growth in recent years amid macroeconomic concerns, constrained fiscal and business spending as well as intensified competition. The COVID-19 pandemic since the start of 2020 had also weighed on the growth prospects of the broader industry.
“Growth of the GCC insurance industry which slowed down since the onset of the pandemic is expected to pick up on the back of a projected rebound in the economy, reviving business confidence and robust diversification plans adopted by the GCC nations. Moreover, the reopening of the tourism sector and mega-events, such as the Expo 2020 and the FIFA World Cup 2022, are likely to provide an additional boost to growth going forward,” said Alpen Capital (ME) managing director Sameena Ahmad.
She said, “The pandemic has brought a shift in consumer behaviours leading to demand for innovative, customised and convenient solutions. This is likely to compel insurance firms in the region to either develop in-house technological capabilities or collaborate with InsurTech companies that can deliver improved customer experience.” M