ME Newswire / Business Wire
LONDON - Tuesday, May 28th 2013
Kuwait’s
insurance market is experiencing a period of uncertainty, as premium
growth has been volatile in recent years, and insurers currently await
potential regulatory developments, according to a new report from A.M.
Best Co.
The report, titled “Kuwait’s Insurance Sector Faces
Regulatory Uncertainty and Volatile Growth”, states that while Kuwait’s
total gross premium written (GPW) is expected to increase in 2013 at a
faster pace than that of other more mature insurance markets, it will
increase at a slower rate than most other Gulf Cooperation Council (GCC)
countries. Kuwait is the third-smallest insurance market within the
GCC, larger than Oman and Bahrain, with total GPW at KWD 226 million
(USD 819 million) in 2011.
Non-life insurance in Kuwait accounts
for the vast majority of GPW, with planned construction projects, such
as the Vision 2035 national development plan, expected to further
increase the non-life sector’s share of total premium. However, while
according to the International Monetary Fund (IMF), Kuwait’s economy
grew by an estimated 5.1% in 2012, it is forecasted to expand by just
1.1% in 2013—the lowest rate for a GCC country. Mahesh Mistry, director,
analytics, said: “Though construction projects are expected to support
insurance demand, A.M. Best expects insurance market growth to be
modest. There are no plans to introduce new compulsory lines of business
in Kuwait, and A.M. Best does not see any impetus for an increase in
life insurance penetration”.
The report also looks at the
challenges facing Kuwait’s insurance sector. It notes that discussions
are underway to create an independent insurance supervisor and update
the country’s old insurance law; however, the timetable for such
regulatory developments remains uncertain. Also, A.M. Best considers
there to be too many small insurers, servicing a population that the IMF
estimates to be 3.9 million in 2013. Yvette Essen, director, industry
research - Europe and emerging markets, and report author, added: “Too
many conventional insurers and Takaful operators lack scale and are
servicing a small, highly competitive insurance market. The larger,
top-tier companies benefit from strong technical performances, branding
and recognition, while medium-sized insurers struggle to create a
presence. Pricing pressures also raise doubts as to the profitability
and sustainability of the small and niche insurers”.
The majority
of small Kuwaiti insurers are largely focused on domestic business.
While Kuwait generally has been perceived to have a low exposure to
catastrophe perils, which somewhat mitigates risk concentration for
insurers, companies need to be aware of the accumulation of risks, given
the prospect of an increasing frequency of natural catastrophes in the
region.
To view a video of Mahesh Mistry discussing the Kuwait insurance market, please visit http://www.ambest.com/v.asp?v=kuwait513.
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=212898.
A.M.
Best Europe – Rating Services Limited is a subsidiary of A.M. Best
Company. A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit
www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
Contacts
A.M. Best Co.
Mahesh Mistry, +(44) 20 7397 0325
Director, Analytics
mahesh.mistry@ambest.com
Yvette Essen, +(44) 20 7397 0322
Director, Industry Research
Europe & Emerging Markets
yvette.essen@ambest.com
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
Vasilis Katsipis, +(971) 4375 2782
General Manager, Market Development
A.M. Best - MENA, South & Central Asia
vasilis.katsipis@ambest.com
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