The recently released report by A.M. Best Company, titled “Kuwait’s Insurance Sector Faces Regulatory Uncertainty and Volatile Growth”, highlights the current uncertainty prevalent in the sector owing to volatile premium growth over the last few years.
The report states that while Kuwait’s total gross premium written (GPW) is expected to increase at a faster pacein 2013, than that of other more mature insurance markets, it will increase at a slower rate than most other Gulf Cooperation Council (GCC) countries.
The insurance market within Kuwait recorded a GPW at KWD226m ($819m) in 2011, the majority of which is comprised of non-life insurance. The Vision 2035 national development plan along with considerable construction projects in the pipeline, are expected to further increase the share of non-life insurance.
Commenting on the findng 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 International Monetary Fund (IMF), forecasts Kuwait’s economy to expand by just 1.1% in 2013 This figure was an estimated 5.1% in 2012. The forecasted growth rate for 2013 is the lowest for a GCC country.
The report identified some of the challenges currently being faced by the insurance sector:
- Unceertain timetable for regulatory developments including installation of an independent insurance supervisor and upgradation of the country’s old insurance law
- Limited number of insurance professionals catering to a population that the IMF estimates to be 3.9 million in 2013
- Those small number of insurers are alrgely focused on domestic business
- Low awareness of the accumulation of risks, given the prospect of an increasing frequency of natural catastrophes in the region.
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.”