New Financial Services market report from Business Monitor International: "Kuwait Insurance Report Q1 2013"
Boston, MA -- (SBWIRE) -- 03/12/2013 -- Key Insights And Key Risks
The Kuwait Insurance Report considers the prospects for both life and non-life insurers in the country. In theory, Kuwait should be home to one of the Middle East's leading insurance sectors. Thanks to energy exports, the economy has consistently performed well and local insurance companies are well established.
Kuwait is also the base for very substantial and innovative shari'a-compliant financial institutions. The Kuwait Investment Authority is one of the major shareholders in Arig, one of the leading regional reinsurance companies.
In reality, though, the general picture of the sector in late 2012 remains a very depressing one of continuing stagnation. Even by the depressed standards of the Middle East and North Africa (MENA) region, non-life penetration is low and, indeed, appears to have fallen quite sharply in 2011 and H112. In their latest results, some companies have reported stable premiums, while others suggest that their business has actually shrunk. In November 2012, Gulf Insurance, which accounts for roughly half of all activity in the entire insurance sector, reported that gross written premiums had risen by just under 10% in the first three quarters of 2012 (relative to the previous correponding period). Net underwriting profit fell relative to the first nine months of 2011. For a long time, Gulf Insurance has been focusing on opportunities outside Kuwait. Whether it signs a major regional bancassurance deal remains to be seen.
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We are presently unable to see an obvious catalyst - such as new laws that make private health insurance compulsory - which could cause the growth rate to increase significantly. This is an important way in which Kuwait's insurance sector differs from its counterparts in other Gulf Cooperation Council (GCC) countries. Life insurance does exist in Kuwait: however, in a country that has a very comprehensive and generous social security system, life density, too, remains at extremely low levels.
Unlike its counterparts in Bahrain, Qatar and the UAE, the government is not actively seeking to promote the development of financial services - although the Minister of Commerce and Industry announced in October 2011 that she would, in the near future, issue a directive in relation to the regulation of the (re)insurance companies and the insurance brokers operating in Kuwait. As far as we can see, though, the new law - to replace the present outdated legislation - has yet to be passed by Kuwait's parliament.
Meanwhile, the insurance companies are small even by the standards of the Middle East. Kuwait's 12 or so takaful operators, which account for about one fifth of the activity in the sector (in terms of premiums/contributions), are tiny.
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