GCC: Takaful operators face rising claims amid stiff competition, declining 1H profits
Source: Middle East Insurance Review | Oct 2021
The profits of takaful providers in the GCC deteriorated in 1H 2021 as claims returned to normal levels after last year’s lockdowns and prices were held back by competition. Despite this, growth prospects for the industry remain favourable, Moody’s Investors Service said in a report last month.
“The GCC takaful sector’s 2021 performance reflects rising claims and stiff competition in a still fragmented industry,” said Moody’s vice president-senior analyst Mohammed Ali Londe. “Competition will continue to pose profitability challenges for the industry, while low interest rates and volatile financial markets will also weigh on their investment income.”
Moody’s expects takaful players to accelerate their technology investment and smaller players to seek M&A deals to improve efficiency and comply with more demanding regulatory requirements, particularly in Kuwait, Saudi Arabia and the UAE.
The GCC takaful sector’s combined premium revenue rose by 0.5% in 1H 2021 versus 1H 2020. Revenue was held back by intense price competition.
GCC takaful operators, which focus on retail lines, will continue to benefit from the widening of compulsory retail covers, such as for medical, as well
as from growing demand for health insurance post-pandemic. M