Re/insurance in the Middle East and Pakistan: annual outlook and review (2019)
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The outlook for the insurance industry in the Middle East and Pakistan is positive, this report from Swiss Re Institute says. We expect demand for personal lines insurance to pick up with a growing middle class, growing acceptance of conventional and deepening penetration of Takaful insurance, and the emergence of bancassurance as a leading distribution channel. The main contributions to premium growth on both the non-life and life sectors will come from the member states of the Gulf Cooperation Council (GCC).
The key takeaways from the paper include:
- Alongside slowing growth globally, we forecast that gross domestic product (GDP) in the Middle East and Pakistan will increase by 2.1% in 2019, down from 2.4% in 2018. Even so, the outlook remains positive, with the significant strengthening of oil prices in the year to date lending support.
- Non-life premiums in the region are forecast to grow by 4.3% in real terms this year, and will maintain growth of up to 5% in 2020. In the GCC, premium growth will exceed 5% in 2019-20.
- Growth in non-life will be supported by rising incomes, infrastructure investments, and growing awareness and demand as local laws mandate or extend compulsory medical and liability coverage.
- We forecast a 3.3% contraction in life premiums in the Middle East and Pakistan this year, due to economic slowdown. Premium growth in the GCC member states will remain positive at around 4%.
- Over the longer term, with overall penetration still very low, the life sector in the region overall will benefit from rising income levels and growing awareness of the benefits of insurance.
- Reinsurance business in the region has been growing modestly alongside development of the primary market. We expect this trend to continue, supported by positive regulatory developments, including a move to risk-based capital requirements, and improved enterprise risk management.
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