ReportsnReports.com: Bahrain Insurance Report Q3 2011
Business Monitor International 's "Bahrain Insurance Report Q3 2011" is now available at ReportsnReports.
- Dallas, TX (1888PressRelease) August 05, 2011 - For all the success of the Central Bank of Bahrain (CBB) in promoting the development of financial services, the insurance sector is small by most standards.
The political unrest in Bahrain and the region has been bad news for most non-life insurers, which already faced a variety of problems.
Life insurance companies, takaful operators and reinsurance companies continue to grow. Political stability is an absolutely necessary condition for the development of a thriving offshore/regional financial services business. Regardless of the ultimate impact on Bahrain's economy from the political unrest so far in 2011 (we discuss three possible scenarios in this report), recent events have been disastrous for offshore banking and tourism.
Early indications are that the unrest has made things even more difficult than it was previously for conventional (ie: non-takaful) non-life insurers in a small market that was not growing particularly quickly, which was fragmented and characterised (like several others in the Middle East) by intense price competition. Players were chasing business regardless of profitability in 2010 in their quest for large corporate clients, as well as in the pursuit of business in 'basic' lines such as motor insurance. As if this was not enough, the growth of insurance was constrained in 2010 by the downturn in the construction and real estate sectors.
In other words, the excellent work by the CBB to develop a first-class regulatory environment, promote Islamic finance worldwide and nurture the growth of financial services in Bahrain over decades has not produced an insurance sector that is resilient in face of the latest unrest. Interestingly, Bahrain has become a far less important market for takaful and shari'a-compliant insurance than the UAE, let alone Saudi Arabia.
Nevertheless, there are some reasons for optimism. Partly because of the growth in bancassurance and partly because of the development of new products by local and regional insurers, the small local life segment continues to expand. Takaful contributions are not growing at the explosive rates of 2-3 years ago but they are still rising at double-digit rates. Perhaps most importantly, the reinsurers that are active in Bahrain appear to be in expansion mode.
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