Middle East: Life premiums expected to grow in GCC states

The life sector in the Middle East and Pakistan is less well-developed than the non-life market, accounting for around a fifth of total premiums in the region, noted Swiss Re Institute (SRI).

In a report titled “Middle East outlook: Diversification to drive economic and insurance market growth”, SRI said that in nominal terms, life premiums reached $8.2bn in 2023, with Pakistan having the largest market (37% share) among the seven countries (six GCC states and Pakistan).

Looking ahead, SRI said, “In nominal terms, life premiums will likely grow this year but in real terms, we forecast a 4.1% contraction in volumes, mainly due to an estimated 10.7% decline in premiums in Pakistan due to inflation effects and the withdrawal of a tax credit in 2022.

“For the GCC overall, we expect premium growth to return to positive territory this year. An expanding expatriate population, rising employment and high interest rates will likely offer support.”

At 0.2%, life insurance penetration in the Middle East and Pakistan is well below the global and emerging market averages. This is largely down to cultural reasons: in Islamic countries, Sharia-compliant insurance is available as an alternative to conventional cover.

Historically, appreciation of the need for life insurance has also been limited.

However, the COVID-19 pandemic experience raised awareness of risk and of the utility of coverage, which should support demand. This includes for saving products, for which there is more appetite in the non-GCC countries in the region.