Life insurance premium growth in the Middle East, Central Asia and Turkey slowed to 7.5% in 2017 (2016: 15%), according to the latest Swiss Re Institute sigma study released last week and titled "World Insurance in 2017".
Life business in the region has been sluggish due to slowing economic growth and lower disposable income after the governments cut subsidies on utilities and gasoline, the report says.
Premium growth in Turkey remained strong (23%), supported by solid growth in credit-linked business. Excluding Turkey, life premiums grew by 3.2% (2016: 12%) in the region. In the UAE, the region´s biggest market, premium growth slowed to an estimated 3.3% in 2017 (2016: 13%) as a large number of expatriates are leaving the UAE due to Emiratisation and the economic slowdown. In Saudi Arabia, life premiums grew by 1.9% in 2017, after declining slightly in 2016. In Oman, premiums contracted by 3.7% in 2017 as redundancies in the construction industry led to lower insurance requirements for employees.
Premiums in Pakistan have grown rapidly over the last few years fuelled by bancassurance and the introduction of tax credits in 2011 for investments in life insurance. Ongoing war and strife in markets such as Syria, Yemen and Libya continues to restrain sector growth in those countries, though these are small markets.
The projected economic slowdown in the GCC countries will stifle life premium growth in the medium term. However, Swiss Re Institute's long-term outlook for the Middle East and Pakistan region remains positive. Low penetration rates and increasing awareness of insurance, coupled with structural factors such as smaller families and growth of private-sector employment, should increase demand. A large working age population will push demand for savings, protection and retirement products.
On the other hand, the recent drive by the GCC governments to increase local employment in companies, resulting in expatriates leaving the country, may hurt the life insurance sector in the near-term, since a big chunk of life insurance is purchased by them.