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Kuwait Insurance Report Q1 2011
Business Monitor International, Feb 2011, Pages: 71
The Kuwait Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kuwait's insurance industry.
Kuwait’s insurance sector is one in which much needs to change if the country is to shake its status as something of an industry backwater. As BMI’s discussion on the economic and political outlook shows, progress towards economic reform and liberalisation continues at a slow pace, at a time when inwards investment has been constrained by a challenging political environment. It is evidently not a market in which foreign insurers have felt the need for a lowering of barriers to entry.
There is little evidence that this is changing. The larger listed Kuwaiti insurance companies have published their results for H110. The results point to growth in premiums in 2010 as a whole of 15.9%. This compares favourably with the 8.3% growth that was achieved by the same companies in 2009.
However, in H110, most of the growth came from a surge in premiums written by Kuwait Re and Warba Insurance Company. Gulf Insurance, the local major that accounts for about half of all premiums written by the listed Kuwaiti companies, reported that its gross written premiums rose by just 4.2%. For al-Ahleia Insurance and Kuwait Insurance, growth in H110 was at 12-14%. Wethaq Takaful and First Takaful, the other listed companies, appeared not to report premiums for H110.
As is the case in several other Middle Eastern countries, the level of development of the life segment is embryonic. This may be because the government makes extensive social security benefits available to its citizens and it is not clear what will be a catalyst for this to change.
In this report, BMI continues to provide a breakdown of the insurance sector by line from the point of view of the companies. In Kuwait, comprehensive motor insurance (presumably compulsory motor third party liability) was the largest line in the non-life segment, accounting for just under half of gross written premiums. Other major lines included life and health, marine aviation and transport, and property and fire insurance. BMI emphasises, though, that in Kuwait, as in much of the Middle East and North Africa, the (overwhelmingly non-life) insurers lay off a lot of the risks with reinsurers. Net premiums are a lot lower than gross premiums.
At the time of writing, BMI has been able to ensure that the report includes actual data for 2009.Bearing in mind the results announced for H110 by the listed Kuwaiti companies, BMI forecasts total premiums in 2010 of KWD228mn. This includes non-life premiums of KWD175mn and life premiums of KWD53mn. In 2015, the corresponding figures are forecast to be KWD358mn, KWD285mn and KWD72mn. In terms of the key drivers that underpin the forecasts, BMI expects non-life penetration to rise from 0.44% of GDP in 2010 to 0.54% in 2015, and for life density to increase from US$57 per capita to nearly US$72 over the same period. BMI’s Insurance Business Environment Rating for Kuwait is 44.3
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