Robust economic development and lines of compulsory insurance have been the main drivers of industry expansion in the region in recent years, says Swiss Re Institute (SRI).
In a report titled “Middle East outlook: Diversification to drive economic and insurance market growth”, SRI says that notably, efforts by member states of the Gulf Cooperation Council (GCC) to diversify their economies away from dependency on oil production have brought substantial investment in infrastructure and tourism. This should boost demand for non-life covers, as will favourable regulatory developments.
The report authored by Dr Thilak Venkatesan, economist, Dr Chandan Banerjee, Natural Catastrophe economist, and Dr Mahesh H Puttaiah, head of Insurance Market Analysis – all of Swiss Re Institute – says that on the life side, an expanding expatriate population in GCC member states, rising employment and high interest rates should support market growth.
Overall insurance penetration across the Middle East and Pakistan remains low, signalling scope for further growth and also opportunity for the industry to help strengthen economic resilience across the region.
Insurance market growth in the Middle East and Pakistan
Total insurance premiums (non-life and life) in the Middle East and Pakistan were an estimated $50bn in nominal terms in 2023, up from $45bn in 2022. The non-life market dominates, with an 82% share of total premiums.
In real terms, SRI estimates that non-life premiums in the region will grow by 6.2% this year, slower than an estimated 12% in 2023 and 11% in 2022. The slowdown will be due to the base effects of the strong growth in the previous two years, particularly in Saudi Arabia and the UAE, coming through.