DUBAI, 19 May 2005 — Arab states must regulate their insurance markets to attract investors to an industry which could be worth $40 billion within a decade, an insurance expert said yesterday.

Bassel Hindawi, member of the executive committee of the International Association of Insurance Supervisors (IAIS), said the lucrative Middle East insurance sector stands to gain by adopting IAIS regulatory and supervisory standards.

“For growth in the insurance market to be achieved, there has to be a proper regulatory framework in place to ensure discipline in the market and provide comfort for the policy holders and investors,” Hindawi told Reuters. “Reputable players are always looking for a market that is predictable, transparent and with a clear framework,” he said.

Analysts say the Middle East insurance market is now worth about $7 billion and is expected to mushroom as the region’s population booms.

Some countries, such as Bahrain and the United Arab Emirates, have been taking steps to regulate their insurance industries, but analysts say much more needs to be done.

“The growth potential for insurance, especially in the United Arab Emirates, is huge due to its rising numbers of expatriates each year,” said one insurance specialist.

The IAIS core principles set conditions for supervisory bodies, laws, and market analyses and deal with disclosure, fraud and anti-money laundering rules.

“But the core principles are only effective if enforced by an independent supervisory authority that should be accountable for policies and has a stable source of funding,” Hindawi said.

Governments also need to launch complementary initiatives such as raising awareness of the insurance sector, training employees and making use of technology.

A lack of innovative products was also contributing to the regional market’s underachievement, Hindawi said.

“The region is depending on traditional insurance business and not so much going after new product development” which, he said, needed to be tailored to the specific market’s needs.

One such product that has been expanding in the region is bancassurance, or distributing insurance products through banks.