News MiddleEast09 Jul 2018

Middle East:Non-life business dragged down by sluggish growth

09 Jul 2018

Non-life premium growth in the Middle East, Central Asia and Turkey slowed to 2.1% in 2017 (2016: 10%) dragged by sluggish growth in Turkey and Saudi Arabia, according to the latest Swiss Re Institute sigma study titled "World Insurance in 2017" released last week.

In Turkey, premiums are estimated to have fallen by 3.0% in 2017 (2016: 21%) due to a decline in motor following the implementation of a premium ceiling in April 2017. In Saudi Arabia, premiums continued to stagnate as growth in the health sector was offset by weakness in motor. In the UAE, non-life premium growth remained strong at around 14% in 2017 (2016: 18%), bolstered by regulatory initiatives such as the introduction of higher unified motor premium rates in January 2017 and compulsory medical insurance. Iran´s real non-life premiums were flat in 2017 as growth was normalised after strong growth in 2016 (11%) when the international sanctions were lifted.

Profitability remained under pressure due to inadequate pricing, lack of underwriting discipline and the higher cost of compliance due to recent regulatory developments.

In Swiss Re Institute's view, the outlook for non-life insurers is mixed. The budget spending on health care, education and infrastructure announced by the Gulf states will support related business lines. Health insurance will continue to drive growth as local laws mandate and/or extend compulsory health coverage for nationals and/or expatriates.

In personal lines, premium growth will pick up as awareness and acceptance of takaful and conventional insurance products rises, and as more banks begin to sell insurance products. Intense competition will continue to affect rates and profitability. Although the regulatory developments could further squeeze margins in the short-term, they should lead to improved profitability and stability in the longer term.

 

 

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