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Bahrain Insurance Report Q1 2011
Business Monitor International, Jan 2011, Pages: 75
The Bahrain Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bahrain's insurance industry.
In some ways, Bahrain’s position in the Middle East is analogous to that of Singapore in South East Asia. Both countries are city-states, islands and have relatively few natural resources – with the result that they have had to develop as regional service centres. Both have highly respected central banks and regulators that have worked assiduously to promote financial services, including insurance. Great credit is due to the Central Bank of Bahrain (CBB) that the country’s insurance sector has continued to grow steadily even though Bahrain, like Singapore, was hit hard by the downturn in trade in the wake of the global financial crisis. In 2010, non-life and life premiums rose by 41% and 5% respectively.
In short, a downturn in economic activity has been more than offset by a rise in non-life (and almost certainly life) penetration (ie: premiums as a percentage of GDP). As the tables in this report show, the effect of the global financial crisis seems to have been that growth in Bahrain’s insurance sector slowed to single figures for a year. The key question, therefore, is will growth accelerate again? BMI believes strongly that the answer is yes – but from 2011. By virtually all measures, insurance is growing rapidly across the Middle East. Bahrain is the longest established international business centre in the region. Along with Bank Negara Malaysia and the Securities Commission of Malaysia, the CBB has been a major and successful proponent of Islamic finance at the global level. Bahrain and Malaysia are home to important international Islamic finance institutions. Despite the financial problems of some issuers of Islamic bonds in other countries in Q409, Islamic finance continues to develop rapidly from a low base.
Bahrain’s non-life insurance sector continues to be dominated by two large companies, Bahrain Kuwait Insurance and Bahrain National Insurance, which together account for about one-third of gross written premiums in that sector. Other large players in the sector include Takaful International, al-Ahlia Insurance, Gulf Union Insurance & Reinsurance, AXA Insurance (Gulf) and ACE American Insurance. In addition, 15 other, smaller companies participate in the non-life market.
The life sector is dominated by Life Insurance Corporation (International), MetLife ALICO and Zurich International, which together account for approximately two-thirds of gross written premiums. Eight other players share the remaining third of the market share for the life sector.
This report provides a breakdown of the insurance sector by line, from the point of view of the regulator or trade association. In Bahrain in 2009, comprehensive motor insurance (presumably compulsory motor third party liability, CMTPL) was the largest line in the non-life segment, accounting for a little under half of gross written premiums. Other major lines included fire, property and liability, medical and engineering cover.
The report includes final data for 2009 and amended projections for the year as a whole in order to take into account results for H110 that have been released. Total premiums are estimated in 2010 of BHD261mn. This includes non-life premiums of BHD201mn and life premiums of BHD60mn. In 2015, the corresponding figures are forecast to be BHD566mn, BHD411mn and BHD155mn. (Note that these figures do not include the significant inwards reinsurance premiums written by Arig and other professional reinsurers and re-takaful. Such business amounted to approximately BHD300mn in 2009.) In terms of the key drivers underpinning our forecasts, non-life penetration is expected to rise from 1.79% of GDP in 2010 to 2.30% in 2015, and life density is expected to increase from US$158 per capita to US$408 over the same period. BMI’s Insurance Business Environment Rating for Bahrain is 58.3 out of 100.
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