The insurance industry in Bahrain has been witnessing marked expansion as a result of the kingdom's economic growth and public's awareness and acceptance of the need for insurance. The industry continued to attract a number of insurance players around the globe in the last few years. In a study by Kuwait-based Global Investment House (GIH) on Bahrain's insurance sector, it said several new insurance licenses were granted in 2007 and 2006, expanding the scope of insurance activities, particularly in the takaful and retakaful areas. “The insurance industry in Bahrain has been growing steadily in recent years. Public perception on life insurance, in particular, has changed considerably with the introduction of Takaful and now represents a huge, fairly untapped opportunity,” the report said. At the end of November 2007, Bahrain had a total of 165 insurance and insurance related firms as compared to 155 reported at the end of 2006 and 147 at the end of 2005. The growth has also created employment that reached 1,103 at the end of 2006 compared with 1,003 at the end of 2005. Bahraini nationals accounted for about 63 percent of the total employment in the insurance sector. The domestic market comprised of 33 insurance companies carrying out direct insurance business, out of which 22 are locally incorporated firms and 11 branches of foreign firms. The latest major international player to establish operations in Bahrain was Germany's Allianz Group, which launched its wholly-owned subsidiary, Allianz Takaful (Bahrain), to serve as the group's global hub for Islamic insurance (takaful). The firm has also established in Bahrain the Allianz MENA Holding Company, which will provide support services to the group's entities throughout the Middle East region as well as the Indian Subcontinent. In the same year, Hannover Re opened a branch in Bahrain that will provide conventional reinsurance services throughout the region and beyond. The move followed the establishment in Bahrain of Hannover ReTakaful, the principal underwriter of Hannover Re's global retakaful business. The growth of the insurance industry has continued its trend during 2006 with the total gross premiums from general and life insurance increased by a whopping 26.0 percent to reach BD118.2 million in 2006 as compared to BD93.8 million recorded in the previous year. However, though the life insurance sector in Bahrain has seen significant growth in the recent years, it only accounts for 0.9 percent of the total insurance issued in 2006. In 2006, the life insurance premium registered a turnaround with a substantial increase of 49.4 percent to reach BD24.5 million after dropping by 11.8 percent in the previous year. Life insurance premiums accounted for 20.8 percent of the total premiums written in 2006. In 2006, a total of 2.48 million insurance policies were issued in Bahrain as compared to 2.28 million in 2005, an increase of 8.5 percent. Although the gross premium collected on life insurance increased substantially, the growth in life insurance claims was only marginal at 13 percent and touched BD8.9 million in 2006 as compared to BD7.9 million recorded in previous year. “The penetration levels in the life insurance segments in the entire GCC is far below the global penetration rate, as this segment is still fairly new in this region. Many international players are entering the insurance market to tap this segment,” the GIH study said. General insurance premiums registered a significant gain of 21.0 percent to reach BD93.6 million in 2006 as compared to BD77.4 million recorded in the previous year and accounted for 79.2 percent of the total premiums underwritten in 2006. “This percentage has come down from 82.5 percent recorded in the previous year despite the increase of 21 percent in general insurance premiums and reflects the growing acceptability of life insurance in the region,” the report said. The vehicle sector represented 96.3 percent of the total policies issued in 2006 followed by the marine and miscellaneous with 1.2 percent and 1.0 percent, respectively. The gross claims from motor insurance have increased by 7.9 percent to BD29.5 million in 2006 over BD27.3 million. The fire segment which accounted for 21.6 percent of the total gross premiums in general category posted the largest increase in gross premiums of 36.8 percent in 2006. The miscellaneous insurance comprises supplementary services, which include medical insurance, personal accident, contractors risk etc. The growth in number of policies issued in the miscellaneous segment could be attributed to the plans for compulsory insurance for expatriate workers especially medical insurance in Bahrain. The GIH report further said the loss ratio, which had increased from 25.5 percent in 2004 to 48.0 percent in 2005 in life insurance, came down again to 36.3 percent mark in 2006 having a positive impact on the overall profitability of the insurance industry. “As a result, the overall loss ratio of the insurance market declined from 49.5 percent in 2005 to 46.0 percent in 2006. The decrease in overall loss ratio has also been contributed by decrease in loss ratios in the motor and miscellaneous sectors as well,” GIH said. __
