GCC insurance industry to reach $40bn by 2017

Updated 19 August 2013
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GCC insurance industry to reach $40bn by 2017

Kuwait Financial Centre (Markaz) in its recently published executive summary of GCC Insurance report analyzes the trends in insurance premium volumes across the GCC in the Takaful (Islamic insurance), life, non-life, health and reinsurance domains, and compares the macro insurance factors such as insurance density and insurance penetration of the GCC states with those of the rest of the world.
While economic growth has been strong in the region, the insurance sector has lagged behind. The lack of awareness and the transient nature of expatriates are key factors linked to the very low levels of insurance penetration.
The opportunities for both local and international insurers in the industry are huge, resulting in increased competition, and a challenging business environment. However, backed by strong growth opportunities in the GCC, we expect the entire industry to grow and reach approximately $28 billion by the end of 2015 and apparently touch $40 billion mark by 2017.
The GCC enjoys a market size of $16.3 billion in terms of premium volume. As of 2012, the GCC region exhibits an insurance penetration (including life and non-life insurance) of just about 1.14 percent compared to the global average of 6.5 percent.
Nonetheless, the insurance industry in the GCC region is catching up with the global trend and has witnessed a CAGR of about 18 percent between 2006 and 2012, compared to the global CAGR of just 4.37 percent during the same period.
The drivers for the insurance industry in the GCC include the rising income levels, high amount of expatriate population, the increasing awareness among the population about the benefits of insurance, and the government’s policies mandating insurance in some sectors.
The region also has a favorable demographic trend with youth population projected to grow and the middle class set to rise in the next few years.
The Takaful Islamic Insurance has developed well over the recent years in the GCC region mainly owing to the development of Islamic finance practices, large Muslim population and changes in consumer patterns post the global financial crisis. The life insurance sector has seen a very little growth over the years as the GCC population has primarily relied on the respective governments for absorbing life related risks. Hence the life insurance market was about $2.185 billion as of 2012.
The non-life insurance has been the major driver in this region amid all other sectors with nearly 87 percent of the premiums being collected in this segment primarily because of increasing business activity in the region and government’s plans for economic diversification. The non-life insurance sector accounted for $14.1 billion in 2012 in GCC. Mass construction, huge energy plants, and the expansion of business in this region provide huge opportunities for non-life insurance.
Health insurance is largely popular in the GCC due to the introduction of compulsory health insurance schemes. Driven by population growth, and greater awareness of health care issues, the health insurance industry in the GCC has grown over the years and is worth about $4.69 billion in terms of premium volume.
In terms of regulations, the GCC countries are taking steps toward enhancing the insurance regulation standards so as to upgrade them toward global practices. The lack of unified practices across the GCC region makes it difficult for operators to comply with the regulatory requirements of each GCC states. Bancassurance, which is selling of insurance products via banks, is gaining huge prominence in the GCC.
Other distribution channels used are agents, brokers and online channels. However, for the industry to grow, operators should focus on delivering customized products for the consumers over the online medium.


Dubai property developer Damac on hunt for land in Saudi Arabia

Hussain Sajwani
Updated 18 March 2019
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Dubai property developer Damac on hunt for land in Saudi Arabia

  • Brexit a “concern” for UK property market says Sajwani
  • Developer mulls investing “up to £500 million” on London project

LONDON: The Dubai-listed developer Damac says it is scouting for additional plots of land in Saudi Arabia, both in established cities and the Kingdom’s emerging giga-projects such as Neom.
Hussain Sajwani, chairman of Damac Properties, also said the company would look to invest up to £500 million ($660 million) on a second development in the UK, and that it is on track to deliver a record 7,000 or more units this year.
Amid a slowing property market in Dubai, Damac’s base, the developer is eying Saudi Arabia as a potential ground for expansion for its high-spec residential projects.
Damac has one development in Jeddah, and a twin-tower project in Riyadh — and Sajwani said it is looking for additional plots in the Kingdom.
“It’s a big market. It is changing, it is opening up, so we see a potential there … We are looking,” he said.
“In the Middle East, Saudi Arabia is the biggest economy … They have some very ambitious projects, like the Neom city and other large projects. We’re watching those and studying them very carefully.”
The $500 billion Neom project, which was announced in 2017, is set to be a huge economic zone with residential, commercial and tourist facilities on the Red Sea coast.
Sajwani said doing business in Saudi Arabia was “a bit more difficult or complicated” that the UAE, but said the country is opening up, citing moves to allow women to drive and reopen cinemas.
He was speaking to Arab News in Damac’s London sales office, opposite the Harrods department store in Knightsbridge. The office, kitted out in plush Versace furnishings, is selling units at Damac’s first development in the UK, the Damac Tower Nine Elms London.
The 50-storey development is in a new urban district south of the River Thames, which is also home to the US Embassy and the famous Battersea Power Station, which is being redeveloped as a residential and commercial property.
Work on Damac's tower is underway and is due to complete in late 2020 or early 2021, Sajwani said.
“We have sold more than 60 percent of the project,” he said. “It’s very mixed, we have (buyers) from the UK, from Asia, the Middle East.”
Damac’s first London project was launched in 2015, the year before the referendum on the UK exiting the EU — the result of which has had a knock-on effect on the London property market.
“Definitely Brexit has cause a lot of concern, people are not clear where the situation will go. Overall, the market has suffered because of Brexit,” Sajwani said.
“It’s going to be difficult for the coming two years at least … unless (the UK decides) to stay in the EU.”
Despite the ongoing uncertainty over Brexit, Sajwani said Damac was looking for additional plots of land in London, both in the “golden triangle” — the pricey areas of Mayfair, Belgravia and Knightsbridge, which are popular with Gulf investors — and new residential districts like Nine Elms.
Sajwani is considering an investment of “up to £500 million” on a new project in the UK capital.
“We are looking aggressively, and spending a lot of time … finding other opportunities,” he said. “Our appetite for London is there.”
Damac is also considering other international property markets for expansion, including parts of Europe and North American cities like Toronto, Boston, New York and Miami, Sajwani said.
The international drive by Damac comes, however, amid a tough property market in the developer’s home market of Dubai.
Damac in February reported that its 2018 profits fell by nearly 60 percent, with its fourth-quarter profit tumbling by 87 percent, according to Reuters calculations.
Sajwani — whose company attracted headlines for its partnership with the Trump Organization for two golf courses in Dubai — does not see any immediate recovery in the emirate’s property market, or Damac’s financial results.
“(With) the market being soft, prices being under pressure, we are part of the market — we are not going to do better than last year,” he said. “This year and next year are going to be difficult years. But it’s a great opportunity for the buyers.”
But the developer said Dubai was “very strong fundamentally,” citing factors like its advanced infrastructure, safety and security, and low taxes.
In 2018, Damac delivered over 4,100 units — a record for the company — and this year, despite the difficult market, it plans to hand over even more.
“We’re expecting north of 7,000,” Sajwani said. “This year will be another record.”