The region’s GDP is expected to grow at a CAGR of 5. 3% to reach $44. 4 billion by 2028.
DUBAI – Alpen Capital, an investment banking advisory firm founded in the United Arab Emirates, predicts that the region’s gross written premiums (GWPs) will grow at a CAGR of 5. 3% to $44. 4 billion through 2028, in its latest GCC Insurance Industry Report. The non-life insurance segment is expected to grow at a CAGR of 5. 4% between 2023 and 2028 to reach $39. 6 billion, accounting for 89. 2% of the region’s GDP through 2028.
The report provides a comprehensive review of the GCC insurance sector, highlighting recent trends, expansion drivers and challenges. It also features some insurance corporations in the area.
The report was presented in a webinar followed by a panel discussion featuring Fareed Lutfi, Secretary General of the Emirates Insurance Association and the Gulf Insurance Federation; Sunil Kohli, CEO of Dhofar Insurance Co. ; and Krishna Dhanak, Managing Director of Alpen Capital. Hameed Noor Mohamed, Managing Director of Alpen Capital, moderated the discussion.
“The GCC insurance sector has grown in recent years, driven by the economic recovery from the COVID-19 slowdown and the successful implementation and advancement of mandatory fitness insurance in GCC countries. This positive trajectory is expected to increase in the long term. Driven by sustained initiatives of economic diversification, population expansion, and a truly extensive progression of infrastructure in the region. GCC regulators and insurance corporations are focusing on achieving better operational efficiency, a better visitor experience, and diversifying the insurance product offering in collaboration with Insurtech corporations. it enables insurers to offer tailor-made products that meet individual needs, leading to a further increase in demand for insurance, says Sameena Ahmad, managing director of Alpen Capital (ME) Limited.
“The insurance sector in the GCC has seen a sharp increase in M&A activity over the past two years, driven by operators’ strategic plans to expand their geographic footprint, regulatory changes, rising operating expenses, competitive pressures and the shortage of obtaining insurance licenses. Regional insurance corporations are looking to invest in synthetic intelligence, the Internet of Things, and blockchain in product progression to provide visitor assistance, real-time claims tracking, and prevent fraudulent claims. We are also seeing an interest in outbound cross-border mergers and acquisitions within the Middle East region are attracting interest from GCC players as well as interest from strategic players to enter the GCC market. Going forward, M&A activity in the region is expected to continue, and we expect a more upd build to focus on collaborations with Insurtech corporations to create new models and operational efficiencies,” says Krishna Dhanak, Managing Director at Alpen Capital.
According to Alpen Capital, the GCC insurance market is expected to grow at an annualized expansion rate of 5. 3%, reaching approximately $44. 4 billion in 2028, up from $34. 3 billion in 2023. Growing customers remain favorable, driven by a resilient economic expansion. a sustained increase in population, a growing need for life and health insurance and ongoing infrastructure progress projects. Life insurance NBI is expected to grow at a CAGR of 4. 0%, from $3. 9 billion in 2023 to $4. 8 billion in 2028. Meanwhile, the non-life insurance segment is expected to grow life (life) in GCC countries grow at a CAGR of 4. 0. %. 5. 4%, from $30. 4 billion in 2023 to $39. 6 billion in 2028. This expansion is expected to be basically driven by the expanding tourism sector and a strong pipeline of genuine real estate projects in progression stages. the final touch in the region. Insurance density is expected to increase from US$597. 6 in 2023 to US$699. 5 in 2028, while insurance penetration is expected to shift slightly over the same period.
Saudi Arabia surpassed the UAE to become the largest insurance market in the GCC in 2022, driven by massive infrastructure development and an increasing demand for motor and medical insurance. Alpen Capital anticipates this trend to persist, forecasting a CAGR of 5.8% for the Kingdom between 2023 and 2038. The UAE’s insurance market is expected to grow at a CAGR of 4.9%, while Kuwait is projected to witness the highest growth rate in the GCC at a CAGR of 6.4%, attributed to steady population growth between 2023 and 2028 and increased government investments in infrastructure.
The report highlights sustained expansion momentum, supported by stronger domestic demand, ongoing reform initiatives, a booming tourism segment, and a rebound in the hydrocarbon market, as points driving expansion in the insurance sector. In addition, economic diversification methods are expected to lead to increased spending on sustainable and select infrastructure projects, thereby expanding the region’s insurable assets. The GCC insurance market is poised to take advantage of a developing population expected to reach 63. 4 million by 2028, representing a CAGR of 2. 0% from 2023. The continued expansion of the mandatory medical and advertising sectors is very likely to contribute to increased demand for insurance products, driving the overall expansion of the insurance industry.
However, the industry is not devoid of its challenges. The fragmented and highly competitive nature of the market fosters price competition to secure business, posing a threat to profit margins for insurers. The implementation of the IFRS 17 standard has introduced complex accounting frameworks, compelling insurers to substantially change their existing processes, proving particularly challenging for medium-sized providers. Rising cession rates and hardening of the reinsurance market has the potential to disrupt business models and adversely affect reinsurance revenues and underwriting margins of insurers. Furthermore, claims inflation and increasing tax rates could potentially impact core business lines, especially motor and medical insurance segments that account for a major portion of the GWP of GCC insurers.
The report notes that the GCC region is an early adopter of global virtual transformation, offering insurers a significant opportunity to expand a virtual ecosystem, improving the visitor experience while reducing visitor acquisition costs. . To build a more secure ecosystem, GCC governments are prioritizing coverage of non-public data, creating opportunities for new products such as cyber insurance. GCC’s focus on virtualization creates several opportunities for Insurtech corporations to reshape the insurance industry using technology, data and visitor-centric approaches. Additionally, the region is experiencing an increase in credit insurance, driven by global industry complexity and economic uncertainties.
The GCC insurance sector is undergoing a significant transformation, driven by favorable demographics, physically powerful economic factors, the advancement of mandatory fitness insurance, technological advancements, and a growing demand for cutting-edge products. The region’s insurance landscape is evolving, with favorable governments. Regulations continuously seek to improve the regulatory environment and operational power to ensure a sustainable business model.
About Alpen Capital:
Alpen Capital (ME) Limited is incorporated as a limited liability company in the Dubai International Financial Centre, Dubai, United Arab Emirates and is authorized through the Dubai Financial Services Authority. Alpen Capital offers a full diversity of investment banking advisory across the M&A, debt, equity and capital markets spaces to some of the largest corporate conglomerates and monetary establishments in the GCC and South Asia. In addition to the United Arab Emirates, it has offices in Qatar, Oman and India.
About Alpen Asset Advisors:
Alpen Asset Advisors Limited, is an independent wealth management firm offering private banking and asset management services. It offers a comprehensive offering covering all asset classes, investment themes & styles and sectors. With our open architecture platform we identify investment opportunities and design an investment program to achieve the wealth creation within the given risk appetite.
For media inquiries, please contact: Sameena Ahmad, Corporate Affairs Email: Sameena. ahmad@alpencapital. com Alpen Capital (ME) Ltd www. alpencapital. com Pradyuth Ramkishore Watermelon Communications Dubai, UAE pradyuth@watermelonme. com
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