MANAMA, 10 August 2006 — The Bahraini insurance sector posted an increase of 5.4 percent in 2005 continuing with the growth trend it has witnessed in past years, according to figures released yesterday by Bahrain Monetary Agency (BMA).
Gross premiums generated in the domestic market for 2005 amounted to BD94.9 million ($251 million), an increase of 5.4 percent over the 2004 figure of BD90.1 million ($238.4 million).
Gross claims surged by 26.8 percent to BD47.5 million ($126 million) in 2005, from BD37.5 million ($99.2 million) the previous year, partly due to new reporting requirements introduced by BMA during 2005.
The domestic market comprised 19 insurance companies carrying out direct insurance business in Bahrain in 2005. The companies comprised 11 locally incorporated firms and eight branches of foreign firms.
“The climate for insurance services continues to improve in Bahrain and the region,” said BMA executive director, Financial Institutions Supervision Abdul Rahman Al-Baker.
“Robust economic growth, renewed government investment in large infrastructure projects and strong private sector investment in real estate and other economic sectors are contributing to the expansion of the insurance sector.”
He added that increasing public awareness and acceptance of the need for insurance was also a contributing factor in the growing demand for insurance products in both the conventional and Islamic sectors. The growth was also reflected in a healthy increase in employment in the insurance sector.
The Bahrain insurance industry employed a total of 1,003 people in 2005. An increase of nearly 9 percent over the 2004 figure of 923. Bahraini nationals accounted for 63 percent of total employment in the sector.
Bahrain’s locally-incorporated insurance firms posted strong gains during 2005, increasing their market share to nearly 74.8 percent, from 70.8 percent in 2004.
Of the total gross premiums, the 11 locally-incorporated firms underwrote BD71 million ($189 million), representing a market share of 75 percent during 2005. This compared with BD63.8 million ($169.7 million), representing a 70.8 percent market share in 2004.
The eight branches of foreign firms underwrote the remaining premiums amounting to BD23.9 million ($63.2 million) in 2005, compared with BD26.3 million ($70 million) in 2004.
Of the total gross premiums underwritten by the all the direct insurance companies operating in Bahrain in 2005, motor, life and fire classes accounted for 72 percent, compared with 74.4 percent in 2004.
Motor insurance constituted the single largest class of business, generating gross premiums worth BD36.9 million ($98 million) in 2005, an increase of 8.5 percent over the 2004 figure of BD34 million ($90 million).
The motor business represented nearly 38.9 percent of total premiums underwritten in the Bahrain market in 2005, compared with nearly 37.8 percent the previous year.
The continued growth in motor business was primarily due to the continuous increase in motor vehicles on Bahrain’s roads. Premiums from life insurance amounted to BD16.6 million ($44 million) in 2005, compared with BD18.6 million ($49.5 million) in 2004. As a result, life assurance represented 17.5 percent of insurance business in 2005, compared with 20.7 percent in 2004.
Life assurance claims totaled BD7.9 million ($21 million) in 2005, an increase of 67 percent over the 2004 figure of BD4.8 million ($12.8 million). Life claims represented 16.7 percent of total claims in 2005, compared with 12.7 percent in 2004. The surge in life claims was largely due to the introduction of new reporting requirements by the BMA.
Fire insurance premiums totaled BD14.8 million ($39.4 million) in 2005, an increase of 3.3 percent over the 2004 figure of BD14.4 million ($38.3 million). The fire premiums represented 15.6 percent of total insurance premiums in 2005, compared with 15.9 percent the previous year.
Fire claims, on the other hand, more than doubled in 2005 to BD5.6 million ($14.9 million), from BD2.6 million ($6.9 million) the previous year. As a result, fire claims increased their share of total claims to 11.8 percent in 2005, from 6.9 percent the previous year.
Miscellaneous insurance comprises medical, personal accident, contractors’ risk, liability, money, casualty guarantee, glass and others that fall outside the key classes. The miscellaneous portfolio registered a 20.6 percent increase in gross premiums, which totaled BD20.7 million in 2005, compared with BD17.2 million ($45.7 million) the previous year. Gross claims of this class shrank 6.7 percent to BD5.8 million ($15.4 million) in 2005, from BD6.2 million ($16.5 4) the previous year.