Boston, MA -- (SBWIRE) -- 02/12/2014 -- As of late 2013, the overpowering impression given by Kuwait's (overwhelmingly non-life) insurance sector remains one of stagnation.
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 2013 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 2012. In their latest results, some companies have reported stable premiums, while others suggest that their business has actually shrunk. The results of Gulf Insurance, which accounts for roughly half of all activity in the entire sector, have been consistent with an uninspiring picture. 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.
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