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Putting a Price on Everything

A recent BMI Research report suggests Qatar’s insurance sector will continue to expand over 2016 and beyond, with premiums estimated to grow by 5% a year on average between 2015 and 2019 to reach $2.5 billion. Motor premiums drive growth in the non-life area, and have expanded by around 6.6% YoY since 2012, and are now worth $600.4 million. On the other side of the coin, Qatar has no significant life insurance sector to speak of, and BMI Research points to this as the reason for the continued dominance of domestic firms and larger multinationals staying away. But for those still on the fence about the sector’s growth prospects, research form Timetric is calling a compound annual growth rate of 6.7% for 2012-17, compared to just 1% for 2008-12, as the country ramps up spending in preparation for the 2022 FIFA World Cup.

By far the biggest headline grabber of recent months has been the government’s decision to cancel its national health insurance program, run by the National Health Insurance Company (Seha). Under Seha, which was only launched in August 2013, Qatari citizens gained access to medical treatment at a variety of private medical facilities that had signed onto the system, with the government picking up the bill. Seha forked out QAR1.3 billion in its first 15 months according to a government spokesperson, before being unceremoniously canned amid claims that some private health facilities were abusing the system and a wider program of belt tightening. While announcing the end of Seha, the Supreme Council of Health (SCH) announced that private insurers would handle its replacement, with the SCH expected to begin the tender process in early 2016. And if all goes swimmingly, the new system will be up and running by the middle of the year.


Banks are leading Qatar’s Islamic economy charge, with takaful, or Islamic insurance, enjoying the resultant trickle-down effects. Islamic banks grew by almost 30% between 2009 and 2013, with gross written premiums of the local Islamic insurance industry expected to reach QAR2.1 billion in 2016, according to Zawya reporting. That is up on just QAR995.6 million in 2011. The Qatar’s Islamic insurance industry remains small when compared to countries like Malaysia and Saudi Arabia, with the country holding just 4.7% of Saudi Arabia’s takaful assets as of 2013. That said, Qatar still has a lofty presence. According to an ICD Thomson Reuters Islamic Finance Development report, Qatar’s total Islamic assets stand at $81 billion, ranking it sixth among the top 15 largest Islamic finance countries in the world, offering the takaful industry a unique opportunity for growth.

Speaking to TBY, Nasser Rashid Al Misnad, Deputy CEO of Beema, an insurance firm established by Qatar Islamic Bank (QIB) and Masraf Al Rayan, said, “The Islamic insurance market here is still growing and is not mature yet compared to Malaysia or Saudi Arabia,“ adding that, “the awareness and need for sharia-compliant insurance is growing YoY.“


With the vast number of assets coming online in the run up to the 2022 FIFA World Cup—some estimates put the amount to be spent on new infrastructure at $200 billion—the non-life insurance sector is likely to remain in the driving seat for the foreseeable future, with the life sector still only touted as “a potential future growth area.“ Indeed, the non-life segment dominates the country’s insurance industry, with over 90% of gross written premiums according to a Thomson Reuters report.

But diving further into what makes the non-life sector tick, and a Moody’s report identifies engineering and energy as the main lines that have experienced solid growth in recent years, while also carrying the highest underwriting risk. Other insurers, the report indicates, focus more on motor insurance, due to the mandatory nature of third-party motor coverage in the country. Medical insurance is also a robust sector, set to become even more so with the suspension of Seha. Moody’s also points out that low retention levels in energy and infrastructure insurance indicate a certain dependence on reinsurers, while motor, health, and other wealth management products are “generally retained by the insurers.“ In terms of profitability, the report suggests mixed results, indicating that the larger firms do well off the back of larger energy and infrastructure projects, while the rest of the market remains intensely competitive, leading to poorer performance for smaller players. All players, however, benefit from strong capitalization, diversified portfolios, and a strong regulatory environment.


Qatar’s financial services sector is overseen by the Qatar Central Bank (QCB), although insurance business carried out in the Qatar Financial Centre (QFC) is regulated by the Qatar Financial Centre Regulatory Authority (QFC Regulatory Authority). Takaful lacks an explicit regulatory framework in Qatar, except for those established within the QFC, which fall under the remit of QFC Regulatory Authority rules. QFC was established back in 2005 to boost growth in the financial services industry, as well as promote investment. In that regard, the QFC allows for the establishing of foreign insurance firms, from where they are allowed to then seek insurance business throughout the country. This contracts sharply with Dubai’s DIFC or Jafza, where established foreign insurers must look within the walls for business.

Moving forward, and while the early termination of Seha is a setback for consumers in the short term, in the medium term it offers a new avenue for growth in the private healthcare insurance sector. But although it offers substantial potential, it is dwarfed by the billions of dollars worth of premiums up for grabs as 2022 FIFA World Cup infrastructure pops up over the coming years. Takaful is also a growth sector, yet the lack of any substantial demand for life products is holding the sector back in terms of its attractiveness to foreign investors. As QFC grows in stature, however, more foreign firms are likely to be tempted by the generous incentives on offer and the unique platform that Qatar represents in the GCC.

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