Insurance in the Gulf Cooperation Council
Write an article on Insurance in the Gulf Cooperation Council. It needs to be at least 2250 words. Although economic growth in this region is very high, the insurance sector has fallen behind drastically. According to him, the opportunities for the different local and international insurance company are very high, which will be accounted for increased competition, and also a challenging business environment (Ashcroft, 2013). There is also an expectation that the regions insurance sector will also mature structurally in a way of going forward. Apart from this, in line with positive regulatory developments, there are constant efforts by some of the key insurance players towards achieving greater operational scale and functional efficiency. These companies want to take the first-mover advantage. There is a huge amount of opportunity in the GCC Insurance sector with the bigger organizations in the insurance market getting more and larger in terms of operational volume as well as the penetration in different parts of the world, and in that way leading to the marginalization of smaller companies. The GCC Insurance Industry Outlook: With the untapped open market in place many leading insurance sectors are now looking forward to setting up their business unit in GCC. The opportunity of the untapped market is huge and therefore every organization is looking for taking the first-mover advantage. According to the report published by Alpen Capital (2013), the projective growth rate of the insurance industry in the Gulf region is 18.1% (CAGR) between the time periods of 2012-2017. According to their estimation, the market value of the insurance industry in the Gulf region will reach up to us $ 37.5 billion. Out of this, the life insurance segment will contribute the US $ 2.4 billion and non-life will account for the US $ 35.1 billion. The growth in the non-life part is more due to the strong impetus of construction and infrastructure industries. An enormous portion of oil revenues in the GCC countries is being moved to the development of the non-oil segment in order to support the economic diversification of the sector. As a result, there is strong momentum in the construction sector. This momentum will help the regions non-life insurance segment. Moreover, higher infiltrations of medical insurance and constant growth in the new vehicle sales are also likely to help the growth in the motor insurance sector which in turn will aid the segments growth. The rate of insurance penetration in GCC is also likely to go up from 1.1% in 2012 to 2% by the end of 2017. The industry growth rate comfortably exceeds the pace of GDP expansion in this sector, Non-life insurance growth in the line of increasing infrastructure development and more vehicle sales is likely to surge from 0.9% to 1.9% during the period and will be the key behind the growth of this sector in the GCC region. UAE (United Arab Emirates) and Saudi Arabia are the two largest insurance market at present in GCC. the trend is such that there is every possibility that Saudi Arabia may overtake the United Arab Emirates (UAE) as the largest insurance market in GCC with coming years. (Alpen Capital, 2013). The key Growth factor of the Insurance Industry.