Insurance market set for major growth in 2008

The Middle East’s insurance market is set to witness high growth levels in 2008, as increased demand for private health insurance, a rise in the availability of Takaful (Islamic compliant) insurance, and ongoing expansion in awareness of the importance of life insurance combine to create a ‘perfect storm’ for the industry.

Historically, the Middle East has represented only a small proportion of the global insurance market, but new demographic, social and economic factors are radically reshaping the industry’s regional potential, according to the Mahmoud Nodjoumi, International Vice President of the Chartered Insurance Institute.

A report from Standard & Poor’s Ratings Services points out that, provided the world average insurance premium of $550 per capita is achieved, the GCC insurance market could be worth up to $20bn.

In 2008, new regulations regarding health insurance - which is set to be compulsory for private sector employees in the UAE - as well as the growth of the Takaful market are both set to have a major impact.

This increase in market size will also be driven by the rise in the number of major international insurance companies who have expanded their Middle East operations in the year to better support customers.

‘Many of the trends that drove market growth in 2007 are set to continue to increase in prominence in 2008, particularly in relation to the growth in health and Takaful insurance,’ said Nodjoumi, who is CEO and owner of Nexus, the region’s largest independent financial advisor.

Globally, Takaful is expected to be worth between $7.4bn and $14bn mark by 2015, with the Middle East market set to be a major driver of growth.

‘In many ways, 2008 is set to be a watershed year for the industry in this region, offering major opportunities and providing important support for a growing community of clients,’ added Nodjoumi.

Two other major growth areas tipped for 2008 are home and auto insurance. The ongoing rise in home ownership within the GCC region, in particular, is set to drive sales home owners’ and home content insurance.

Such is the growth in the industry, recruiting talented advisors and developing human resources is set to be a challenge in 2008. The Chartered Insurance Institute is currently working with Nexus to develop dedicated training and certification programmes for the Middle East.

Nexus’ Achievements in 2007:

• Mahmoud Nodjoumi named International Vice President of CII.

• New agreements signed with FWU, Dubai Islamic Insurance and Reinsurance Company (AMAN) and Friends Provident International.

• Opening of new Bahrain office.

• Achieving 90% referral rates for new business.

• Launch of bespoke small business product developed by Zurich International Life, which offers a package of employee life and disability insurance for firms. (Source)