regional watch imea for brokers international markets market intelligence january 2010 broker...

Regional Watch IMEA

FOR BROKERS

International Markets

Market Intelligence

January 2010

Broker Version

Disclaimer

Regional Dashboard

Clic

k to

navig

ate

BAHRAIN SAUDI ARABIA

QATAR

UAE

Disclaimer

SOUTH AFRICA

INDIA

NIGERIAEGYPT

KUWAIT

PAKISTAN

IRAN

BANGLADESH

KENYA

ALGERIA

SRI LANKA

Countries in grey are currently only available for Managing Agents in password-protected Regional Watch

Liability46%

Motor 1%

Misc8%

MAT10%

Property35%

BAHRAIN: country dashboard

R

EG

ULA

TIO

NS

CATASTROPHES Susceptible to droughts (high), earthquakes (medium) and floods (low).

DIS

TR

IBU

TIO

N COMPULSORY CLASSES: 3rd party liability for motor, professional indemnity for insurance intermediaries and workers compensation.

REGULATOR OF INSURERS AND INTERMEDIARIES: www.cbb.gov.bh

DIRECT HANDLING is the major distribution channel.

BROKERS are mostly involved with large commercial and industrial risks and reinsurance outside Bahrain. 32 licenced brokers in 2008, with Willis and Aon amongst the largest and longest established international brokers.

INTERNET AND BANCASSURANCE currently very weak channels.

INSU

RA

NC

E

OVERVIEW

SIZE: 87th worldwide (UK ranks 3rd)

TOP 5 INSURERS: Bahrain Kuwait Ins Co, Bahrain National Ins Co, Takaful International, Al Ahlia Insurance Co and Gulf Union Ins & Re Co, with a combined market share of 75%.

KEY CLASSES: Motor due to its compulsory nature. At 77%, motor is the class with the highest claims ratio.

REINSURANCE: USD 0.17bn (2008)

GWP PENETRATION: ~ 1.7% (2008)

NON-LIFE DWP 2008 USD 0.19BN

DWP SIZE IN USD BN AND DWP GROWTH

0.190.15

0.11

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2006 2007 2008

0%

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LLO

YD

’S

OVERVIEW

SIZE: 65th for Lloyds (UK ranks 2nd)

TOP 5 MA’s: write 19% of Lloyd’s total

KEY CLASSES: MAT and property

REINSURANCE: USD 24.5m (2008)

GWP MARKET SHARE: ~ 7.8% (2008)

STATUS: direct license only for risks not covered locally given approval from the Central Bank of Bahrain. Cross border reinsurance allowed.

NO OFFICE

NON-LIFE GWP 2008 USD 28.4M

GWP SIZE IN USD M AND DWP GROWTH

28.4

21.420.1

0

10

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30

2006 2007 2008

0%

10%

20%

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Back To > Regional Dashboard

Market Intelligence data based on: Bahrain Ministry of Finance, Central Bank of Bahrain, Global Edge, Global Opportunities, Lloyd’s crystal, Lloyd’s Xchanging, Munich Re and World Economic Outlook Database. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008.click for detailed

information

click for basic information

EC

ON

OM

Y

OVERVIEW

GDP SIZE : 97th worldwide (UK ranks 6th)

EASE OF DOING BUSINESS: 18th worldwide

GLOBAL COMPETITIVNESS: 37th worldwide

STRENGTHS: one of the region’s leading financial centres with an open economy

CHALLENGES: an economy highly dependent on oil and hampered to some degree by the Bahrainisation of private sector jobs.

GDP 2008 USD 21BN

GDP SIZE IN USD BN AND GDP GROWTH

2118

15

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R

EG

ULA

TIO

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2007 2008

0%

2%

4%

6%

8%

10%

Industry 39%

Services60%

Agriculture1%

Disclaimer

Property & Liability 10%

MAT 3%

Motor 66%

Misc 5%

Health 16%

MAT 49%Liability 15%

Misc 1% Health 4%

Property 31%

OV

ER

VIE

W

Bahrain’s continued development as an important financial centre has created an insurance market amongst the

most dynamic in the Gulf region. Although it remains the smallest insurance market in the Gulf Cooperation

Council (GCC), it has been growing steadily. Premium growth since 2002 has been strong at approximately 20%

annually.

The insurance market is expected to continue to grow thanks to growing GDP (approximately 7% annually with

equally strong growth expected in the future) and growing insurance awareness within the region. Further growth

may be encouraged by the possible introduction of compulsory health insurance for expatriates (awaiting

parliament approval) in the next few years.

KEY C

LASSES

The key class in Bahrain is motor (66%), of which Lloyd’s writes an insignificant proportion on a reinsurance

basis. The second largest class is health (16%), whose size is expected to grow as Bahrain considers

compulsory health insurance for expatriates. Again, Lloyd’s writes a very small proportion (4%) of this class.

Although MAT is the smallest class (3%), it accounts for approximately half of Lloyd’s written premiums from

Bahrain.

The following slide provides information for all (Bahrain) insurance classes on GWP size, the split of GWP

between retained and ceded premium, the size and growth of the class and the claims ratio for that class over

the period 2005-2008.

KEY P

LAYER

S

Insurers licenced to write direct business in Bahrain fall into three categories: local

conventional insurers (Bahrain Kuwait Insurance Co), local takaful insurers (Takaful

International) and foreign conventional insurers with a local branch in Bahrain (ACE

American Insurance Co). The insurance company enclosed by brackets indicates

the top insurer by premium within the category in 2008.

In 2008, local conventional insurers wrote the majority (67%) of non-life DWP.

Foreign conventional insurers wrote approximately the same share of non-life DWP

as local takaful insurers (17%).

INSURERS 2008

REIN

SU

RA

NC

E Between 2005 and 2008 approximately half of GWP written in Bahrain was ceded to

reinsurers. Motor is the class with the highest retention (85%), whilst all other

classes have lower retentions ranging from 20% to 50%.

In 2008, Bahrain had 5 registered reinsurance companies, 1 of which was takaful.

The leading and oldest local reinsurer is ARIG (Arab Insurance Group).

Back To > Country Dashboard

Market Intelligence data based on figures from CBB, UNEP and articles from Clyde & Co. For more information on takaful read “Takaful Q&A” and “The future of takafu”l from Clyde & Co along with Ernst and Young’s “Takaful Report 2009”. Disclaimer

Retained 51%

Ceded 49%

Local conventional

67%

Local takaful 16%

Foreign convetional

17%

BAHRAIN: the insurance market

CLAIMS RATIO DWP SIZE (USD M) & GROWTHGWP 2008 OVERVIEW

CLA

SS

OV

ER

VIE

W GWP 2008 USD 0.36BN

GWP SIZE (USD BN) & GROWTH CLAIMS RATIO The key class in Bahrain by GWP is motor;

Insurance market growth has been strong due to government investment in infrastructure, private investment in real estate and growing insurance awareness amongst the public;

Claims ratio across Bahrain are consistently medium as reported by CBB.

51% 56% 54%

0%

20%

40%

60%

80%

100%

2006 2007 2008

PR

OP &

LIA

B

A high proportion of property and liability GWP is ceded (78%);

Property and liability is a medium sized class (23%) in Bahrain. Lloyd’s writes a significant proportion (15%) of this class;

Claims ratio for property and liability are reported to be consistently below the Bahrain insurance market average.

MA

T

USD 20M

USD 146M

A high proportion of MAT GWP is ceded (69%);

MAT is a small class (6%) in Bahrain. Lloyd’s writes a large proportion (70%) of this class;

Claims ratio for MAT are reported to be consistently below the Bahrain insurance market average.

23% 20%

37%

0%

20%

40%

60%

80%

100%

2006 2007 2008

MO

TO

R

A low proportion of motor GWP is ceded (15%);

Motor is a large class (40%) in Bahrain, aided by its compulsory nature;

Claims ratio for motor are reported to be consistently above the Bahrain insurance market average.

MIS

CELL

AN

EO

US USD 55M A high proportion of miscellaneous GWP is

ceded (83%);

Miscellaneous is a medium sized class (15%) in Bahrain. Lloyd’s writes a small proportion of this class;

Claims ratio for miscellaneous are reported to be consistently below the Bahrain insurance market average.

Retained 17%

Ceded 83%

7%

30%22%

0%

20%

40%

60%

80%

100%

2006 2007 2008

HEA

LTH

USD 57M Approximately half of health GWP is ceded (46%);

Health is a medium sized class (16%) in Bahrain. Lloyd’s writes a small proportion of this class;

Claims ratio for health are reported to be consistently above the Bahrain insurance market average.

Retained54%

Ceded 46%

64% 68% 62%

0%

20%

40%

60%

80%

100%

2006 2007 2008


Market Intelligence data based on figures from CBB.. Disclaimer

0.240.27

0.36

0%

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0.0

0.1

0.2

0.3

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2006 2007 2008

Property & Liability 23%

MAT 6%

Motor 40%

Misc 15%

Health 16%

4.8

8.0

17.9

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80%

120%

160%

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8

2006 2007 2008

Retained 31%

Ceded69%

Retained 22%

Ceded 78%

44%

27% 31%

0%

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40%

60%

80%

100%

2006 2007 2008

USD 83M

84108

124

0%

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40

80

120

160

2006 2007 2008

75% 77% 77%

0%

20%

40%

60%

80%

100%

2006 2007 2008

Retained85%

Ceded15%

7.0

5.3

9.3

-40%

0%

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120%

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2006 2007 2008

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120%

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2006 2007 2008

BAHRAIN: classes of business

BAHRAIN: regulations

CB

B

The Central Bank of Bahrain (CBB) is the regulator of financial services in Bahrain, including insurance.

Volume 3 of the CBB rulebook covers the licencing regime for both insurers and intermediaries.

CBB’s policy is to allow foreign insurers to operate within the market either by setting up a local branch or as a

new start-up – no local ownership is required. Once established, all insurers are expected to maintain minimum

solvency margins, with further solvency requirements based on premium income. Licenced insurers are then

allowed to write both direct business within the Bahrain market as well as reinsurance of Bahraini and foreign

business.

BIA

The Bahrain Insurance Association (BIA) was formed in 1993 and now boasts 43 members comprising local and

foreign insurance and reinsurance companies and insurance intermediaries. The BIA aims to interface with the

CBB on behalf of its members and seeks to promote both the insurance industry within Bahrain and Bahrain as a

regional insurance centre.

OV

ER

VIE

W

Lloyd’s GWP growth since 2002 has been very erratic. A period of decline between 2002 and 2004 was followed

by a period of erratic growth. It is unknown whether Lloyd’s decline in GWP between 2002 and 2004 follows that

of the Bahraini insurance market, as data on the latter is available only from 2005. For 2006 and 2007 Lloyd’s

GWP growth was below that exhibited by the Bahrain insurance market, before overtaking it in 2008. CAGR

since 2002 has been approximately 5%.

The chart on the right illustrates how the different classes have been fairing within Lloyd’s, as a percentage of

total GWP written by Lloyd’s, from 2001. Lloyd’s two key classes (MAT and property) have been fairing erratically

since 2001, which may be partially due to rate changes.

In the last 5 years MAT and liability GWP have been on the decline (as a proportion of Lloyd’s GWP) whilst

property and health have been on the rise.

The Lloyd’s market is fairly consolidated in terms of managing agents, with the top 10 bringing in approximately

32% of GWP. The top 10 brokers place approximately 46% of GWP (2008).

LLOYD’S GWP SIZE (USD M) AND GROWTH CLASS GWP AS % OF TOTAL DWP

LIABILITY

PROPERTY

MAT

MISC

HEALTH

For more information on insurance regulation visit the BIA, CBB and Clyde & Co websites. Lloyd’s data from Xchanging.


Disclaimer

0%

20%

40%

60%

80%

01 02 03 04 05 06 07 08

0

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25

30

02 03 04 05 06 07 08-20%

-10%

0%

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20%

30%

40%

BAHRAIN: Lloyd’s position

http://cbb.complinet.com/cbb/microsite/cbb_rulebook.html

Liability46%

Motor 1%

Misc8%

MAT10%

Property35%

Market Intelligence data based on: Clyde & Co articles, Ernst and Young Takaful Report, Global Edge, Global Opportunities, Lloyd’s crystal, Lloyd’s Xchanging, SAMA (Saudi Arabia Monetary Agency), Munich Re, World Economic Outlook Database and worldwide market interviews. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008.

click for detailed information


LLO

YD

’S

OVERVIEW

SIZE: 34th for Lloyd’s (UK ranks 2nd)

TOP 5 MAs: write 20% of non-life GWP


REINSURANCE: USD 80m (2008)

GWP MARKET SHARE: ~ 3.6%

STATUS: direct license only for risks not covered within Saudi Arabia. Cross border reinsurance allowed. No permission to appoint coverholders.

NO OFFICE

NON-LIFE GWP 2008 USD 100M


INSU

RA

NC

E

OVERVIEW

SIZE: 43rd worldwide (UK ranks 3rd)

TOP 5 INSURERS: Saudi Re, MedGulf, NCCI, Bupa Arabia, Malath Cooperative. The NCCI has a market share in excess of 40%.

KEY CLASSES: Health and motor due to their compulsory nature. Claims ratio for the two classes are reported to be consistently above the Saudi Arabian insurance market average.

REINSURANCE: USD 0.93bn (2008)

GWP PENETRATION: ~ 0.6%

NON-LIFE DWP 2008 USD 1.83BN

DWP SIZE IN USD BN AND DWP GROWTH

Misc2%

Health55%

Motor36%

Property1%

MAT3%

Liability3%

CATASTROPHES Susceptible to droughts (high) floods (medium) and epidemics (medium).

EC

ON

OM

Y

OVERVIEW




STRENGTHS: a strong financial position and an economy opening up to foreign investment.

CHALLENGES: conservative policies have slowed the liberalisation of an economy strongly dependent on the oil sector.

GDP 2008 USD 468BN


R

EG

ULA

TIO

NS

DIS

TR

IBU

TIO

N DIRECT HANDLING: strong distribution channel. Most insurance companies have their own direct sales forces.

BROKERS: strong distribution channel. Some major international brokers licensed to do business in Saudi Arabia are: AON, Marsh and Willis. All three have a ground presence.

INTERNET AND BANCASSURANCE: currently very weak channels.

COMPULSORY CLASSES: 3rd party motor, professional indemnity for insurance intermediaries, health insurance for expatriates, workers' compensation, medical malpractice

REGULATOR OF INSURERS AND INTERMEDIARIES: www.sama.gov.sa

Agriculture 3%

Industry67%

Services30%

Disclaimer

356 384469

0

200

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2006 2007 2008

0%

1%

2%

3%

4%

5%

1.83

1.41

1.12

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72

93 100

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90

120

2006 2007 2008

0%

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20%

30%

40%

Liability7%

MAT46%

Health4%

Motor2%

Misc8%

Property33%

SAUDI ARABIA: country dashboard Back To > Regional Dashboard

OV

ER

VIE

W Saudi Arabia is particularly susceptible to flooding, epidemics and sandstorms. The biggest economic impact and

loss of life is attributed to flooding, which in the last 15 years has killed over 300 people in 7 major events. The

most notable flood is that of 2009 in Jeddah, which killed over 120 people and caused losses estimated to exceed

USD 270m. Three epidemics in the last 15 years, focused around 2000-2001, killed approximately 200 people.

Sandstorms are a frequent occurrence, but rarely kill anyone and cause only minor damage to property.

SAUDI ARABIA: the insurance market (1)

INSU

RA

NC

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REN

D 2

00

3-2

01

5

The Saudi insurance market is one of the fastest growing

insurance markets in the world according to a 2009 report

by RNCOS (Research and Consultancy Solutions). The

strong steady growth has been on the back of compulsory

insurance implementations, which included compulsory

motor for foreign cars in 2002 and compulsory health

insurance for expatriates in 2006. Additions to compulsory

health insurance will include an extension to all Saudis

working in the private sector in 2010 and an extensions to

all Saudi nationals in the near future.

TOTAL GWP SIZE (USD BN) AND GROWTH

Notwithstanding the current financial crisis, the 2009 report on the Saudi insurance market by RNCOS forecasts

a 13% annual growth between 2009 and 2013. This should lead to an insurance market worth approximately

USD 5bn by 2013. This contrasts with SAMA estimates of a Saudi insurance market worth approximately USD

8bn in 2015.

TA

KA

FUL

TAKAFUL is an Islamic insurance concept compliant with Shari’ah Law, whose operations are based upon

principles of mutuality. Takaful arrangements are based on two unilateral contracts, whereby a participant gifts

their contribution to the takaful fund and is then gifted the amount of their claim in the event of a loss.

Participants’ contributions must be segregated from the assets of the takaful operator and the participant retains

an interest in the takaful fund. The takaful operator then manages the takaful fund on behalf of the participants,

sharing back possible resulting surpluses amongst the participants.*

CHALLENGES: some potential issues that takaful may face going forward include: the lack of sufficient Shari’ah

compliant investments resulting in a undiversified investment portfolio, a lack of (insurance) qualified Shari’ah

scholars and sales personnel, a lack of diversified distribution channels such as the internet and bancassurance

and uncertainty regarding the genuine Shari’ah compliance of takaful operations and product offerings.

OPPORTUNITIES: global takaful contributions are currently estimated to be less than 1% of total worldwide

written premiums every year, despite the fact that Muslims account for approximately 25% of the world’s

population. Although there are questions with regards to the proportion of this population accessible to insurers,

the potential market for takaful remains large.

Market Intelligence data based on figures from SAMA, UNEP and articles from Clyde & Co. * For more information on takaful read “Takaful Q&A” and “The future of takaful” from Clyde & Co along with Ernst and Young’s “Takaful Report 2009”.


Disclaimer

0.0

0.5

1.0

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2.0

2.5

3.0

03 04 05 06 07 08

0%

10%

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40%

SAUDI ARABIA: catastrophes

Market Intelligence data based on figures from SAMA, articles from Clyde & Co and 2006 reports from worldwide markets entitled “Interviews in London” and “Interviews in Dubai”.

REIN

SU

RA

NC

E

The combination of large risks to be insured and the low levels of local capacity result in

low retention levels across Saudi, with approximately a third of all written premiums

being ceded to reinsurers in 2008. The vast majority of reinsurance within the gulf

region is written on a proportional treaty basis. The rest is written on a facultative basis

and is largely predominant within the construction and energy industry.

The Cooperative Insurance Regulations ( ) state that Saudi brokers must first seek to place business with

licensed Saudi reinsurers before placing with foreign insurers not licensed in Saudi. This introduces a significant

competitive advantage to locally registered reinsurance companies. In 2009, Saudi Re is the sole licensed

reinsurer in Saudi.

Lloyd’s two key classes (MAT and property) are the two classes within Saudi with the highest ceded premium

proportion at 75% and 89%, respectively.

KE

Y C

LASSE

S

KEY CLASSES in Saudi are health and motor, which together account for approximately 70% of all written

premiums (GWP). Lloyd’s two key classes are MAT and property, which together account for approximately 80%

of all written premiums (GWP) at Lloyd’s. Interestingly, Lloyd’s two largest classes are two of Saudi’s smallest

classes, whilst Lloyd’s two smallest classes (health and motor) are Saudi’s two largest classes.

HEALTH is expected to be the fastest growing class due to future extensions in its compulsory nature to include

Saudi nationals. It is a competitive market used by many insurers to gain entry into other markets and is

characterised by claims ratios which are consistently above the Saudi average across all classes…

MOTOR is a developed and competitive market which is expected to continue to grow in size. Again, the claims

ratios for motor are consistently above the Saudi average across all classes… This is believed to be due to

comparatively low driving standards across the region.

LIABILITY is yet to take off across the region. This is believed to be due to a number of factors including a

general lack of regulatory requirements and a culture characterised by low litigiousness levels. However, liability

is expected to emerge as a considerable opportunity (along with energy) as the number of expatriates in the Gulf

region is expected to grow in the medium term. Claims ratio for liability are consistently below the Saudi average

across all classes…

PROPERTY premiums in the Gulf region are believed to be extremely competitive compared to those charged in

international markets. Notwithstanding this, claims ratios for property are consistently below the Saudi average

across all classes…

MAT includes such risks as supertankers, construction barges and airlines. At 47%, this is Lloyd’s largest class.

Claims ratio for MAT are consistently above the Saudi average across all classes….

The following slide provides information for all (Saudi) insurance classes on GWP size, the split of GWP between

retained and ceded premium, the size and growth of the class and the claims ratio for that class over the period

2005-2008. All presented data is based on SAMA reports.


Disclaimer

Retained67%

Ceded33%

SAUDI ARABIA: the insurance market (2)

PR

OPER

TY

USD 0.21BN A high proportion of property GWP is ceded (89%);

Property is a small class (8%) of which Lloyd’s writes a significant proportion of GWP (15%);

Claims ratio for property are reported to be consistently below national average across all classes.

Ceded89%

Retained11%

39% 38% 39%

0%

20%

40%

60%

80%

100%

2006 2007 2008

LIA

BIL

ITY

USD 0.14BN

Ceded59%

Retained41%

29% 29%17%

0%

20%

40%

60%

80%

100%

2006 2007 2008

Approximately half of liability GWP is ceded;

Liability is the smallest class (5%) with erratic growth;

Claims ratio for liability are reported to be very low and consistently below the national average across all classes.

MA

T

USD 0.20BN A high proportion of MAT GWP is ceded (75%);

MAT is a small class (7%) of which Lloyd’s writes a significant proportion of GWP (25%);

Claims ratio for MAT are reported to be consistently above the national average across all classes.

CLAIMS RATIODWP SIZE (USD M) & GROWTHGWP 2008 OVERVIEW

MO

TO

R

USD 0.68BN A very low proportion of motor GWP is ceded (5%);

Motor is a relatively large class (25%), aided by its compulsory nature.

Claims ratio for motor are reported to be consistently above the national average across all classes.

MIS

CELL

AN

EO

US

USD 0.24BN

Ceded 87%

Retained 13%

26%

48%

29%

0%

20%

40%60%

80%

100%

2006 2007 2008

A high proportion of miscellaneous GWP is ceded (87%);

Miscellaneous is a small class (9%) with good growth;

Claims ratio for miscellaneous are reported to be consistently below the SA average across all classes.

HEA

LTH

Retained78%

Ceded22%

USD 1.29BN

56% 62% 59%

0%

20%

40%

60%

80%

100%

2006 2007 2008

A high proportion of health GWP is ceded (78%);

Health is the largest class (46%), aided by its compulsory nature. Lloyd’s however, writes a very small proportion of GWP (1%);

Claims ratio for health are reported to be consistently above the SA average across all classes.

CLA

SS

OV

ER

VIE

W GWP 2008 USD 2.76BN

GWP SIZE (USD BN) & GROWTH CLAIMS RATIO Key classes in SA are health and motor following the introduction of compulsory motor and health insurance;

Growth has been strong due to growing insurance awareness and the introduction of compulsory insurance classes;

Claims ratio are reported to be consistently medium (between 40% and 50%).

Motor25%Misc

9%

Health46%

Property 8%

MAT 7%

Liability 5%

42%52%

41%

0%

20%

40%

60%

80%

100%

2006 2007 2008


Market Intelligence data based on figures from SAMA.. Disclaimer

2.762.20

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2006 2007 20080%

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252222

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2006200720080%

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585865

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5546

34

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656613484

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800

2006 2007 2008

0%

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Retained 95%

Ceded 5%

53% 50%59%

0%20%40%60%80%

100%

2006 2007 2008

3327

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2006 2007 20080%

20%

40%

60%

1001

642492

0200

400600

8001000

2006200720080%

20%

40%

60%

80%

50%

86%

39%

0%20%40%60%80%

100%

2006 2007 2008

Ceded75%

Retained25%

SAUDI ARABIA: classes of business

OV

ER

VIE

W

Lloyd’s GWP growth since 2002 has been erratic, although largely it has been positive and in excess of 10%.

CAGR since 2002 has been approximately 15%.


total GWP written by Lloyd’s, from 2001. GWP from Lloyd’s two key classes (MAT and property) is very

erratic. Furthermore, Lloyd’s GWP in Saudi’s two largest classes (health and motor) is, and always has been,

very low.

The Lloyd’s market is fairly consolidated in terms of managing agents, with the top 10 bringing in

approximately 30% of GWP. The top 10 brokers however, only place approximately 5% of GWP (2008).

LLOYD’S GWP SIZE (USD M) AND GROWTH CLASS GWP AS % OF TOTAL DWP

LIABILITY

PROPERTY

MAT

MOTOR

MISC

HEALTH

For more information on insurance regulation read ‘Insurance in the Kingdom of Saudi Arabia by Clyde & Co and visit the SAMA website. Lloyd’s data from Xchanging.

SAUDI ARABIA: regulations

SA

MA

Until the implementation of the Cooperative Insurance Regulations (CIR) in 2004, the Saudi Insurance market

was unregulated and largely dominated by Saudi Arabia’s former state monopoly provider the NCCI (National

Company for Cooperative Insurance). The NCCI is now known as Tawuniya, and in 2007 still controlled

approximately 22% of the total insurance market premium.

The introduction of the CIR by SAMA has acted as a catalyst for rapid premium growth within the country. SAMA

is keen to promote the growth of a properly regulated insurance market within Saudi Arabia as part of a wider

policy aimed at encouraging foreign investment in the country.

All insurance companies and insurance intermediaries must be licensed through SAMA. New entrants into the

Saudi insurance market are apparently being encouraged by SAMA to consider merging with an existing licensed

Saudi insurer as a means of entering the market. In 2009, 29 Saudi insurers were registered as licensed through

SAMA.

CIR

The CIR state that insurance must be offered on a cooperative basis “in accordance with the Islamic Shari’ah”.

The CIR then points to the NCCI’s articles of association as guidance for what constitutes a cooperative basis,

although the latter do not set out a detailed framework. The only set requirement would seem to be that a

company must maintain separate profit and loss accounts for policyholders and for shareholders, and that there

must be a distribution of part of the net surplus from the insurance operations amongst policyholders.


Disclaimer

0%

10%

20%

30%

40%

50%

60%

70%

01 02 03 04 05 06 07 08

0

20

40

60

80

100

120

02 03 04 05 06 07 08

-30%-20%-10%0%

10%20%30%40%

SAUDI ARABIA: Lloyd’s position

Liability46%

Motor 1%

Misc8%

MAT10%

Property35%

Market Intelligence data based on: Clyde & Co articles, Global Edge, Global Opportunities, Lloyd’s Crystal, Lloyd’s Xchanging, Munich Re, QFCRA, Qatar Insurance and Reinsurance Review 2008, Standard & Poor’s, Swiss Re Sigma and the World Economic Outlook Database. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008.



LLO

YD

’S

OVERVIEW






STATUS: no direct licence with reinsurance on a cross-boarder basis only. Appointment of cover-holders is not permitted in Qatar.

NO OFFICE

NON-LIFE GWP 2008 USD 38.8M


INSU

RA

NC

E

OVERVIEW


TOP 5 INSURERS: Qatar Ins Co, Qatar General Ins & Reins, Al Khaleej Ins Co, Qatar Islamic Ins Co, Doha Ins Co. Control 89% of market share.

KEY CLASS: Property. Given the size of the property share it is possible that it also includes any liability and miscellaneous premiums.

REINSURANCE: USD 0.5bn (estimate 2008)


NON-LIFE GWP 2008 USD 0.93BN

GWP SIZE IN USD BN AND GWP GROWTH

CATASTROPHES Susceptible to droughts (high), floods (medium) and earthquakes (medium).

DIS

TR

IBU

TIO

NEC

ON

OM

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OVERVIEW




STRENGTHS: top exporter of natural gas with a per capita income amongst the world’s highest.

CHALLENGES: an economy dependent both on gas prices and foreign labour.

GDP 2008 USD 102BN


R

EG

ULA

TIO

NS

COMPULSORY CLASSES: 3rd party liability for motor, professional indemnity for architects, energy consultants and engineers and liability insurance for aircraft hulls.

REGULATOR OF INSURERS AND INTERMEDIARIES: www.qfcra.com

DIRECT HANDLING is the major distribution channel for non-life business especially major energy risks.

BROKERS are a recently developed distribution channel subject to stringent regulations and not incorporated into the Insurance Decree. Main international brokers licenced in Qatar are Aon, HSBC, Marsh, Nasco and Nexus.

BANCASSURANCE is a growing distribution channel.


Industry77%

Services 23%

Disclaimer

5771

102

0%

10%

20%

30%

40%

0

40

80

120

2006 2007 2008

0.46 0.51

0.93

0.0

0.3

0.6

0.9

1.2

2006 2007 2008

0%

25%

50%

75%

100%

6963

39

-50%

0%

50%

100%

0

20

40

60

80

2006 2007 2008

Property72%

Motor14%

MAT14%

Property26%

Liability 8%MAT65%

Health 1%

QATAR: COUNTRY DASHBOARD

OV

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Market Intelligence data based on Clyde & Co articles, ‘The Qatar Insurance Review’ by the QFCA and the ‘The Qatar Insurance Sector in 2009’ by Standard & Poor’s


THE ECONOMY. GDP growth in Qatar over the last 5 years has been strong in excess of 10% annually. In

per capita terms, Qatar now has one of the highest levels of GDP in the world. Although strong GDP growth is

a recognised driver for a growing insurance market, the size of the insurance market in Qatar will eventually

be capped by the (small) size of the population. A report on the Qatar insurance market (2009) by Standard &

Poor’s concludes however, that the Qatar insurance market represents an attractive long-term prospect for

insurers.

MAT. Qatar is developing into a regional hub for marine and aviation transport and infrastructure spending is

high. The growth of the marine and aviation transport sector is of great interest, as Lloyd’s is estimated to

have written nearly 20% of Qatar MAT premium in 2008.

HEALTH. The possible future introduction of compulsory health insurance for expatriates would boost the

health insurance sector. This sector is currently non-existent due to free state healthcare available to all Qatar

residents – a factor likely to inhibit the growth of health insurance within Qatar.

MOTOR. Motor is a relatively small class in Qatar and is currently not very profitable due to low fixed tariffs on

compulsory third-party vehicle liability. Motor insurance accounts remain however the principal point of

contact between insurers and the vast majority of their retail customers.

LOCAL INSURERS. These have been making a concerted effort in the last few years to develop an

international dimension to their operations.

TAKAFUL. The proportion of the insurance market controlled by takaful insurers is unknown, although it is

interesting to note that all local insurers either have a takaful branch or are in the process of establishing a

takaful branch in the country.

REINSURANCE. The 5 top insurers in Qatar control approximately 90% of the market premium and in the last

few years have ceded to foreign reinsurers approximately 60% of their premiums. The size of the reinsurance

market within Qatar is hence estimated at USD 500m in 2008. This heavy reliance of local insurers on foreign

reinsurers is particularly common for large industrial and commercial risks such as marine, aviation and

energy.

Disclaimer

QATAR: THE INSURANCE MARKET

QATAR: regulations

QFC

RA

The Qatar Financial Centre (QFC) was established in 2005 along similar lines to the Dubai International

Financial Centre (DIFC). International insurers currently registered at the QFC include AXA, AIG and Zurich.

Foreign firms operating in or from the QFC can be 100% foreign owned and are allowed to write local business

directly. Note that neither the Bahrain Financial Harbour nor the Dubai International Financial Centre allow

registered foreign insurers to write local business directly.

The QFC Regulatory Authority regulates financial services firms that operate in, or from, the QFC. The

regulatory structure imposed by the QFCRA is closely based on that of the UK’s Financial Services Authority

and the QFCRA has published detailed rulebooks covering insurers and insurance mediators. The regulatory

structure imposed by the QFCRA contrasts with the existing regulatory regime applied internally to local insurers

within Qatar (outside the QFC) by the Ministry of Finance, Economy & Commerce. A unified regulator is

expected by many towards the end of 2010.

OV

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Lloyd’s GWP growth since 2002 has been very erratic, with years of strong growth followed by periods of decline.

CAGR since 2002 has been approximately 5%


total GWP written by Lloyd’s, from 2001. Lloyd’s two key classes (MAT and property) have been fairing erratically

since 2001, which may be due sizeable rate changes in both classes. In the last four years MAT GWP (as a

proportion of Lloyd’s total GWP) has been on the decline, whilst property and liability have been on the rise.

Health and miscellaneous have always been extremely small classes.

Lloyd’s top 10 managing agents write approximately 30% of GWP, whilst Lloyd’s top 10 brokers place

approximately half of Lloyd’s GWP.

LLOYD’S GWP SIZE (USD MN) AND GROWTH CLASS GWP AS % OF TOTAL DWP

LIABILITY

PROPERTY

MAT

MISC

HEALTH

For more information on insurance regulation visit the QFCRA website . Lloyd’s data from Xchanging.


QATAR: regulations

Disclaimer

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50%

100%

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40

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0%

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100%

01 02 03 04 05 06 07 08

QATAR: Lloyd’s position

http://www.complinet.com/net_file_store/new_rulebooks/q/f/QFCRA_4538.pdf

http://www.complinet.com/net_file_store/new_rulebooks/q/f/QFCRA_1993.pdf

Liability46%

Motor 1%

Misc8%

MAT10%

Property35%



LLO

YD

’S

OVERVIEW






STATUS: no direct licence with reinsurance on a cross-border basis only. Appointment of cover-holders is not permitted in the UAE.

NO OFFICE

NON-LIFE GWP 2008 USD 145M


INSU

RA

NC

E

OVERVIEW


TOP INSURERS: Oman Ins Co, ADNIC, Islamic Arab, Arab Orient and Al Ain Ahlia are estimated to have a 33% market share.

KEY CLASS: motor due to its compulsory nature.

REINSURANCE: N/A


NON-LIFE GWP 2008 USD 4.08BN

GWP SIZE IN USD BN AND GWP GROWTH

CATASTROPHES Susceptible to droughts (high), earthquakes (medium) and floods (medium).

DIS

TR

IBU

TIO

NEC

ON

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OVERVIEW



GLOBAL COMPETITIVNESS: 31st worldwide

STRENGTHS: an international hub for trade with a competitive business environment.

CHALLENGES: an economy dependent on oil and property investment; exposed to external and more recently internal shocks and a scarcity of available financial data.

GDP 2008 USD 262BN


R

EG

ULA

TIO

NS

COMPULSORY CLASSES: 3rd party liability for motor, professional indemnity for insurance intermediaries and health for expatriates.

REGULATOR OF INSURERS AND INTERMEDIARIES: www.government.ae/gov

The market for major risks is dominated by direct sales in Abu Dhabi and international brokers in Dubai. Government business in the emirates is always put out to tender.

Bancassurance and the internet are weak channels.

International brokers such as Aon, Heath Lambert, HSBC, Marsh and Willis dominate the broker channel within the emirates.


Disclaimer

Market Intelligence data based on: Clyde & Co articles, Global Edge, Global Opportunities, Lloyd’s Crystal, Lloyd’s Xchanging, Munich Re, Swiss Re Sigma, UAE Interact and the World Economic Outlook Database. DWP = direct written premiums. GWP = gross written premium (includes reinsurance). Claims ratio = claims as % of GWP earned from 2005 to 2008.

Misc18%

Motor35%

MAT16%

Health 14%

Property17%

Property20%

Liability13%

MAT55%

Motor 5%

Health 6%

164 180

262

0%

5%

10%

15%

20%

0

100

200

300

2006 2007 2008

2.36

3.25

4.08

0

1

2

3

4

5

2006 2007 2008

0%

10%

20%

30%

40%

84

121145

0%

10%

20%

30%

40%

50%

0

40

80

120

160

2006 2007 2008

UAE: COUNTRY DASHBOARD

Agriculture 2%

Industry 62%

Services36%

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MARKET GROWTH. Over the last decade, the growth in the UAE insurance market has been driven by the

introduction of compulsory motor insurance, the boom in the construction and real estate sector and the recent

introduction of compulsory health insurance for expatriates. The CAGR since 2005 has been strong at over

30%, and the UAE insurance market is currently the largest insurance market in the GCC. Growth is however

expected to slow down in the near future following weak sales in 2009 and the current economic challenges, as

less new cars and homes were sold and construction projects delays and cancellations set in. What future

growth will occur is expected to be led by the health, property and engineering sectors but will, in the long term,

ultimately be capped by the limited population of the UAE.

MARKET COMPOSITION. The breakdown of the insurance market is fairly even between all classes. Motor is

slightly larger due to its compulsory nature whilst there is currently a limited market for liability, most possibly

due to the low litigiousness characteristic of the region. Takaful insurance accounted for approximately 20% of

GWP in 2008. Although the proportion of premiums ceded to reinsurers is unknown, it is believed to be

shrinking with respect to that ceded in the past.

For more information on the insurance market in the UAE visit UAE interact, Clyde & Co and the Sigma Re website. Information on Lloyd’s status from Lloyd’s Crystal.

Back To > Country DashboardD

IFC

THE DIFC. The Dubai International Financial Centre was established in 2004 and since then has attracted some

major international insurance players including Alliance, Aon, JLT, Generali, Gulf Re, Lockton, Marsh and Tokio

Marine as well as Lloyd’s Watkins. Firms operating within the DIFC are regulated by the

Dubai Financial Services Authority (DFSA), whose current aim is to bring its regime in line with that of other

global insurance markets.

RESTRICTIONS. Currently there are no restrictions with regards to 100% foreign ownership of firms within the

DIFC. Although foreign firms based in the DIFC can currently operate only on a reinsurance basis for local UAE

risks, this restriction is expected to be relaxed in the near future.

LLOYD’S STATUS. For direct insurance purposes, Lloyd’s may appoint coverholders to write both DIFC based

risks and non UAE based risks. For reinsurance purposes, Lloyd’s can either operate on a crossborder basis or

appoint coverholders to write UAE and DIFC based risks. All coverholders must first be approved by the DFSA.

Disclaimer

UAE: insurance market

http://www.dfsa.ae/Pages/default.aspx

OV

ER

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Lloyd’s GWP growth since 2002 has been erratic, although largely it has been positive and in excess of 20%.

CAGR since 2002 has been in excess of 20%.


total GWP written by Lloyd’s, from 2001. Lloyd’s key class (MAT) has always contributed the majority of Lloyd’s

GWP, although its contribution has been on the decline since 2004. Classes which have instead been increasing

in GWP contribution since 2004 are health and property.

Lloyd’s top 10 managing agents write approximately 30% of GWP, whilst Lloyd’s top 10 brokers place

approximately 40% of Lloyd’s GWP

LLOYD’S GWP SIZE (USD MN) AND GROWTH CLASS GWP AS % OF TOTAL DWP

LIABILITY

PROPERTY

MAT

MISC

HEALTH

Data on Lloyd’s from Xchanging.


Disclaimer

0

40

80

120

160

02 03 04 05 06 07 08

-20%

0%

20%

40%

60%

0%

20%

40%

60%

80%

100%

01 02 03 04 05 06 07 08

UAE: Lloyd’s position

Disclaimer

Please note the information contained in this document is based upon data collected from Xchanging and may be incomplete for some classes of business; for instance a substantial figure, which is missing from the REG 258 data set is comprised of UK Motor, which is not processed by Xchanging.

Gross Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but before the deduction of outward reinsurance premiums.

Lloyd’s figures are based on gross written premiums based on figures processed by Xchanging by processing year and country of origin.

Country of Origin: denotes the country from where demand for the insurance / reinsurance emanates; i.e. the coverholder or policyholder, irrespective of the country to which the risk is classified for regulatory reporting purposes.

Processing Year: relates to the calendar year in which the premium, additional or return premium is processed by Xchanging, irrespective of the actual underwriting year of account of the risks (which is determined by the inception date of each risk).

Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by Country Of Origin, but French for regulatory reporting purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 underwriting year of account but may not be processed by Xchanging until 2008 and so be allocated to the 2008 processing year

Appendix: Lloyd’s Data LimitationsBack To > Regional Dashboard

DisclaimerThis document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information Lloyd's does not accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a result of, but not limited to, any statement, fact, figure, expression of opinion or belief obtained in this document.

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