News Middle East04 Dec 2019

Bahrain:Life insurance expected to grow faster than non-life in next 5 years

| 04 Dec 2019

Bahrain's insurance market is estimated to reach $0.8bn in premiums in 2024, registering a CAGR of 1.5% from 2019, says Alpen Capital (ME), a Dubai-headquartered investment banking advisory firm, in a report on the region's insurance industry.

Despite the introduction of mandatory health insurance by 2020, the non-life segment is estimated to grow at a modest CAGR of 0.7% during the forecast period, the report says. On the other hand, the life segment is estimated to grow at a CAGR of 4.4%, primarily aided by population expansion, which is expected to grow at a CAGR of 2.0% between 2019 and 2024. Insurance penetration and density are expected to marginally decline to 1.7% and $482.6 by 2024.

The overall growth of the sector is expected to be supported by the recovery in economic activity, large investments in infrastructure and construction projects and further enhancement of regulatory and supervisory standards. According to the draft national budget for 2019 and 2020, Bahrain plans to spend more than BHD1.3bn ($3.5bn) on 66 new projects spanning several sectors over the next two years.

Sector performance

Bahrain’s insurance sector is the smallest market in GCC and ranked 88th globally based on GWP during 2017-18. Measured by GWP, Bahrain’s insurance sector grew at a CAGR of 1.0% to reach $0.72bn in 2018 from $0.69bn in 2013, recording the slowest annualised growth in GCC.

The share of the life insurance segment has declined since 2013 and recorded GWP of $0.14bn in 2018.

On the other hand, the non-life insurance segment grew at a CAGR of 2.5% between 2013 and 2018, accounting for 80.4% of the country’s total GWP in 2018. Growth in the non-life insurance segment was largely due to an increase in premiums in the marine, health and motor insurance sub-segments. The market shares of motor and health sub-segments in the total non-life GWP expanded significantly over the last five years. The fire, property & liability business segment accounted for 17.1% of the non-life GWP while engineering and marine & aviation segments accounted for 9.7% and 3.6% in 2018, respectively.

Despite being a small market, the overall insurance penetration in Bahrain stood at 1.9%, higher than the GCC average of 1.7% in 2018. Life and non-life insurance penetration rates, which stood at 0.4% and 1.5%, respectively, in 2018 are the second highest in GCC, behind UAE. On the other hand, Bahrain’s total insurance density in 2018 was $488.9, slightly below the GCC average of $496.9. The penetration and density in the life insurance segment have dropped since 2013 as growth in GDP and population outpaced that in GWP.

Regulatory developments

The Central Bank of Bahrain (CBB), the insurance regulatory body in the country, is actively working towards enhancing transparency and raising awareness of the insurance market.

In 2019, the CBB circulated a list of proposed rules, including the introduction of training & competency module, a unified motor comprehensive policy, and solvency control levels. Furthermore, the CBB also issued rules regarding the introduction of insurance aggregators, a strategic move towards establishing InsurTech solutions created by the rising demand from the millennial community. The government also plans to roll out mandatory health insurance from 2020.

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