Attracting global players and established national businesses ensure Qatar is better positioned than most to ride out the global economic crisis.

Market size
Qatar is better positioned than most to ride out the global downturn, thanks to a thriving energy sector – and a formidable infrastructural investment programme. Underpinning the government’s diversification strategy is the development of the Qatar Financial Centre (QFC), which has attracted a steady stream of global insurance players. Recent market entrants include Mitsui Sumimoto Insurance Company and a wave of new brokers.

The government-driven sector helped total gross written premiums break the US$1bn mark in 2008, although premium growth was static or marginal in 2009.

Little progress has been made in developing the personal lines sector although this may change with the increasing focus being given to takaful (led by Qatar Islamic Insurance) and the expected introduction of compulsory health insurance for expatriates. Until now, health insurance has not featured heavily in the portfolios of domestic insurers due to the availability of cheap government healthcare. Motor remains a staple of premium volumes but low-fixed tariffs on motor third- party liability is giving insurers problems.

The creation of a captive insurer, Al Koot, by Qatar Petroleum in 2003, may have reduced the energy company’s insurance expenses and given it direct access to the global reinsurance market. However, the move also potentially placed a substantial proportion of the country’s premium income beyond the reach of the national insurers’, although, in practice, Al Koot seems prepared to continue to share some of this premium locally.

Competitive conditions
Although the Qatar Financial Centre (QFC) has attracted global players, such as Axa, to the scene, Qatar’s established national insurers have strong competitive positions in the domestic market. Qatar Insurance Company (QIC) dominates the market, controlling nearly half of total market premiums.

Qatar General Insurance & Reinsurance Company has an approximate market share of 28 per cent, while Khaleej Insurance & Reinsurance, Doha Insurance and Qatar Islamic Insurance are also significant players. Long-term foreign companies with a presence in the market include: Arabia Insurance, Libano-Suisse Insurance and National Insurance Company of Egypt.

More and more players are looking to invest in the nascent takaful segment, with all existing national players having already set up a takaful operation or in the process of doing so. QIC will hold a 25 per cent stake in Al Dhaman Islamic Insurance, while Al Jisr Takaful Company has been set up as a joint venture between Qatari and Bahraini investors. More recently, Italian insurer Generali, Qatar Islamic Bank (QIB) and broker Beema have begun discussions on a takaful joint venture.

Recent developments
The QFC has issued licences in the past year to: Japanese insurer – Mitsui Sumitomo Insurance Company, reinsurance broker – Chedid & Associates Qatar, takaful operators – T’azur Company and Allianz Takaful, plus SEIB Insurance and Reinsurance Company. The number of insurers operating from the QFC is 10 and the number of insurance intermediaries, nine.

Regulatory overview
Insurance regulator: Ministry of Business and Trade.
Governing legislation: Decree 1 of 1966.
Capital requirements: Branch – INR2m for foreign insurers (in Decree 1 of 1966).
Locally domiciled insurer – INR1.5m rupees for local insurers (in Decree 1 of 1966).
Foreign ownership restrictions: Branch – N/A.
Locally domiciled insurer – foreign ownership limited to 25 per cent and only with approval from the Council of Ministers.
There continues to be two distinct insurance regulatory regimes in place in Qatar, namely the original insurance regulatory regime administered by the MBT and the new Qatar Financial Centre (QFC) regime established in 2005 (discussed below).
There are plans for a unified financial services regulatory regime.

Insurance regulator: Qatar Financial Centre Regulatory Authority (QFCRA).
Governing legislation: QFCRA Prudential Insurance Rulebook (PINS).
Capital requirements: Branch and locally domiciled insurer – higher of (a) US$10m for direct insurers and US$20m for reinsurers; and (b) the QFCRA’s risk-based capital calculation (requirement to hold locally may be waived).
Foreign ownership restrictions: Branch and locally domiciled insurer – 100 per cent foreign ownership permitted.

New entrants into the Qatar insurance market tend to operate from the QFC and will be subject to regulation by the QFCRA. There is no restriction on direct insurance into the market for QFC insurers.

Although composite insurance is not permitted, an insurer can conduct long-term insurance business as well as general insurance business, but only where the general insurance business carried on is restricted to accident and sickness cover.

Regulatory overview provided by Clyde & Co