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Bahrain Insurance Report Q4 2011
Business Monitor International, Nov 2011, Pages: 66
Business Monitor International's 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.
- For all the success of the Central Bank of Bahrain (CBB) in promoting the development of financial services, the insurance sector is small by most standards.
- The political unrest in Bahrain and the region has been bad news for most non-life insurers, which already faced a variety of problems. Local life insurers have also suffered a contraction in premiums in H111.
- Takaful operators, foreign life companies and reinsurance companies continue to grow. Political stability is an absolutely necessary condition for the development of a thriving offshore/regional financial services business. Regardless of the ultimate impact on Bahrain’s economy from the political unrest so far in 2011 (we discuss three possible scenarios in this report), recent events have been disastrous for offshore banking and tourism.
As of late September 2011, the relatively few statistics available suggest that non-life premiums contracted in H111, having (probably) shrunk in calendar 2010. Conditions for non-life insurers were far from optimal even before the political unrest in Bahrain earlier this year. There was intense price competition in a small and fragmented market that was not growing particularly quickly.
Some players were chasing market share (especially in the corporate markets and for motor-related lines) regardless of profitability. Moreover, the sector had had also to deal with the downturn in the construction and real estate sectors in 2010. The gross written premiums of Bahrain National Insurance were about 10% lower in H111 than they had been in H110. Al-Ahleia also suffered a contraction in its business.
However, the gross premiums written by Bahrain Kuwait Insurance Company (BKIC) and the general takaful contributions of Takaful International were higher in H111 than they had been in H110.
If takaful is one part of the market that is still growing, life insurance is another. Media reports and (fairly scant) data indicate that premiums have been rising. However, this growth has been because, thanks in part to product innovation and in part due to bancassurance deals, the expansion in premiums achieved by foreign-owned/affiliated life insurers has exceeded the contraction in premiums suffered by local players.
The gross written premiums of Bahrain National Life and the family takaful contributions received by Takaful International were quite sharply lower in H111 than they had been in H110. LIC (International), on the other hand, appears to be growing strongly.
The results published by ARIG suggest that reinsurance premiums booked in Bahrain have been growing at single-digit rates. However, regional reinsurers have had to deal with higher claims as a result of political unrest in various MENA countries.
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