Gross written premium (GWP) in the GCC insurance market is projected to grow at a CAGR of 5.3% reaching $44.4bn by 2028, said UAE-based investment banking advisory firm, Alpen Capital, in its latest “GCC Insurance Industry” report.
The non-life insurance segment is anticipated to grow at a CAGR of 5.4% between 2023 and 2028 reaching $39.6bn, comprising 89.2% of the region’s GWP by 2028.
This growth is primarily expected to be driven by the expanding tourism sector and a robust pipeline of real estate projects at various stages of completion across the region. Insurance density is expected to increase from $597.6 in 2023 to $699.5 in 2028, while insurance penetration is anticipated to change marginally over the same period.
The life insurance GWP is projected to grow at a CAGR of 4.0%, increasing from $3.9bn in 2023 to $4.8bn in 2028.
The report said that the GCC insurance industry is poised to benefit from a rising population that is expected to reach 63.4m by 2028, representing a CAGR of 2.0% since 2023. The market is also propelled by the economic rebound following the COVID-19 slowdown and the successful implementation and advancement of mandatory health insurance across GCC countries.
This positive trajectory is expected to accelerate in the long term, fuelled by sustained economic diversification initiatives, population growth and substantial infrastructure development within the region.
Both regulators and insurance companies in the GCC are focusing on improving operational efficiency, enhancing customer experience, and diversifying insurance product offerings in collaboration with InsurTech companies.
InsurTech is also enabling insurers to provide customised products that cater to individual needs, leading to a further increase in demand for insurance,” said Alpen Capital (ME) managing director Sameena Ahmad.
However, the industry is not devoid of its challenges. The fragmented and highly competitive nature of the market fosters price competition to secure business, posing a threat to the profit margins of insurers. The implementation of IFRS17 has introduced complex accounting frameworks, compelling insurers to substantially change their existing processes, proving particularly challenging for medium-sized providers. Rising cession rates and hardening of the reinsurance market have the potential to disrupt business models and adversely affect reinsurance revenues and the underwriting margins of insurers. Furthermore, claims inflation and increasing tax rates could potentially impact core business lines, especially motor and medical insurance segments that account for a major portion of the GWP of GCC insurers. M