PROGRESS 2015-2016 ECONOMY
QATAR KEY INDICATORS KEY INDICATORS
2006
2007
2008
2009
2011
2012
2013
2014
GDP ($ billions)
60.9
79.7
115.3
97.8
125.1
169.8
190.3
203.2
211.8
Real GDP (% change)
26.2
18.0
17.7
12.0
16.7
13.0
6.0
6.3
6.2
GDP per Capita (PPP) ($)
118,205
120,210
106,972
114,904
135,294
149,642
150,191
145,539
143,427
Population (millions)
1.0
1.2
1.6
1.6
1.6
1.7
1.8
2.0
2.2
Population between 15 and 64 (%)
78.9
81.6
83.5
84.7
85.4
84.9
84.5
84.0
83.6
Insurance Premiums ($ billions)
0.5
0.7
0.8
0.9
1.0
1.2
1.5
2.0
2.2
Insurance Penetration (%)
0.9
0.9
1.0
0.8
0.7
0.6
0.6
0.7
1.0
Insurance Density ($)
596.8
640.2
788.0
548.6
614.7
579.1
695.9
697.0
979.0
Total Assets - Insurance ($ billions)*
1.7
2.6
3.1
3.4
4.0
4.2
4.5
4.9
5.5
structure and a gradual increase in insurance penetration level in the region,” she said. Continued volatility in oil prices is expected to reduce the growth rate of the oil economies in the GCC region, causing some countries to restrict their spending, mainly towards the infrastructure sector. This could impact the insurance industry in the short to medium term. “The persistent sluggishness in oil prices might put pressure on the GDP in the near term, creating challenges for its growth. In light of all these facts, the outlook for the GCC insurance industry is cautiously positive in the near to medium term,” Sameena Ahmad said. The other challenge for the industry is the low awareness about the benefits of insurance, especially among the locals and the small and medium businesses. The importance of insurance as an effective means of wealth protection, savings, and security is yet to become widely known among the locals, the Alpen Capital’s report said. EXPOSED TO RISKS Qatar’s insurance market will, however, experience significant growth over the coming years given its low insurance penetration level in the region, Moody’s Investors Service said in its report entitled “Growing Economy Will Drive Further Market Growth Over Next Two Years.” The largest local insurers are the most profitable, but are often exposed to high underwriting risk associated with the engineering and energy lines. “These two main lines have experienced rapid growth and also carry the highest underwriting risk, particularly in terms of loss severity, as indicated by the volatile claims ratios of the larger national insurers that dominate these lines,” the report said. Qatar is the fastest-growing insurance market in the GCC, with a compound annual growth rate of 22.4% between 2006 and 2013 and recorded premiums of QR7.28 billion ($2 billion) in 2013, equating to approximately 10% of the premiums written in the GCC, making it the third largest insurance market
32
2010
in the GCC. In 2015, reports indicate that the growth in total premiums is likely to be around 25%. “The growth of Qatar’s insurance market results from the nation’s rapid economic progress, as shown by a GDP that has more than tripled since 2006, a strong focus on infrastructure development and an increasing population which has doubled over the past decade. To a lesser extent, the growth is also spurred by third-party motor insurance and health insurance becoming compulsory,” said Mohammed Ali Londe, an analyst at Moody’s. The remaining insurers compete more actively in motor insurance, as third-party motor insurance is compulsory in Qatar, and medical insurance, as a result of the in-progress tiered implementation of compulsory medical cover for nationals, expatriates and visitors. Low retention levels in energy and infrastructure insurance show a high reliance on reinsurers, indicating limited risk-bearing capacity, although motor, health and other wealth management-related products are generally retained by the insurers, the Moody’s report said. NO IMPACT According to Qatar Financial Centre (QFC), the slowdown in the economy has not affected the MENA insurers whose premiums are expected to outgrow the region’s economic growth. Releasing the MENA Insurance Barometer findings on the eve of Multaqa Qatar 2015, the QFC said that insurance regulation in the region, however, was found to be inadequate for lack of solvency margins, insufficient minimum capital requirements and a general lack of cohesion, transparency, consultation and implementation. The dearth of local talent also remains a challenge. Nevertheless, over the next 12 months, medical insurance is expected to be the fastest-growing line of business in the region, followed by motor and engineering, whose rankings were unchanged from the previous year’s barometer, the QFC said