Regulators need to gear up for Mena insurance growth

The Mena insurance sector is expected to grow through the coming years and policymakers and regulators will have to address the challenges that lie ahead for the region to capture the insurance sector's full growth potential, Booz & Co said in a study.

To achieve these goals, policymakers and regulators will have to act locally, regionally and internationally: locally by working closely with insurance companies, service providers and other industry stakeholders to ensure a close oversight of their activities and yet provide enough room for them to grow organically and inorganically; regionally by working closely with other regulatory authorities of the Mena region to promote transparency, collaboration,and implementation of international standards; and internationally by collaborating with standard-setting bodies to move understanding of regulatory and supervisory matters further, said Peter Vayanos, a partner at Booz & Company.

Booz & Co said the UAE market was the largest in terms of gross premium income (GPI), representing more than $5 billion (Dh18.3bn), followed by Saudi Arabia with $3.1bn and Morocco with $2.5bn in 2008.

Bahrain, Algeria, and the UAE showed the strongest GPI growth rates between 2007 and 2008, at 46 per cent, 45 per cent, and 41 per cent, respectively.

But there is still room for improvement. "The Mena region's share of the world market accounted for just 0.42 per cent last year.

Furthermore, insurance penetration – GPI as a percentage of gross domestic product – remains low in the Mena region," said Vayanos. This ratio grew to 1.08 per cent in 2008 from 1.05 per cent in 2005.

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