News
Gulf Insurance Set For 2010 Consolidation
| February 22, 2010 by Rob Morris
GULF INSURANCE COMPANIES ARE EXPECTED TO CONSOLIDATE IN 2010
Lawyers at a banking and finance conference predict a year of consolidation for Gulf insurers.
The next 18 months will see “significant” conventional and Islamic deals among Gulf Arab insurance companies as they consolidate to tap huge growth potential, local lawyers have claimed.
Speaking at the Islamic Banking and Finance Summit in Dubai, Peter Hodgins, partner at international law firm Clyde & Co, said deal activity in the region would be “significant in terms of jurisdiction and in terms of names”, Reuters reported.
Hodgins added there would be two or three significant deals this year.
According to Clyde, more international firms are expected to form joint ventures in the Middle East to tap into Islamic insurance and the potentially lucrative takaful industry.
In the next five years, experts believe the takaful industry will double in growth from $7.4 billion up to $15 billion in value.
“There are 179 insurance companies, including takaful, in the GCC issuing $10.4 billion of insurance premiums. That’s around a quarter of the insurance premiums of Belgium,” Reuters reported Hodgins as saying.
“Saudi Arabia has 29 insurance companies and a population of 28 million. That’s a huge market with an insurance penetration of 0.6 percent.”
Health insurance is expected to account for the biggest demand in takaful as Saudi Arabia, Dubai, Qatar, Abu Dhabi and Bahrain have or will soon announce new health insurance laws.
The shared risks and rewards between customers and insurers is the biggest difference between takaful and conventional insurance products. Standard insurance generally involves the insurer taking all the risks for premiums.
