Kuwait's property and casualty and health insurance sectors have been assigned 'intermediate risk' by S&P Global Ratings.
Overall, the P&C and health sectors in Kuwait remain profitable, supported by relatively low product risk as most local insurers predominantly retain short-tail motor and medical business, which has predictable claims settlements, said the ratings agency. The more complex risks are generally ceded to local and international reinsurance markets.
Pandemics are excluded from most common insurance policies and the Kuwait government is covering most of the cost of medical care related to COVID-19, leaving insurers with limited exposure to such claims.
Kuwait’s insurance sector has positive medium-term growth prospects supported by upcoming infrastructure projects and various government initiatives (especially on the health insurance side), which are expected to create further demand for insurance products, said S&P.
However, measures taken to contain the COVID-19 pandemic could lead to a slowdown in premium growth and profitability in 2020. S&P expects premium to grow more slowly, by up to 5% due to the lockdown measures, combined with low hydrocarbon prices. Growth is expected to pick up from 2021, reaching 5%-10%, provided the economic conditions improve and the government initiatives and projects go according to plan.
S&P’s industry risk assessment of Kuwait is comparable with a number of other P&C and health markets globally. In the Gulf region, the UAE, Saudi Arabia and Qatar are at the same level.