Despite a slowing economy, the GCC is the fastest growing insurance region and is poised to grow in double digits this year, outpacing all other markets, according to the latest report by rating agency Moody's Investors Service. The insurance sector of the region grew 15 per cent in 2014, with the premiums of all six countries amounting to $22.2 billion. Between 2006 and 2014, the GCC insurance industry has more than tripled, with premiums increasing from $6.4bn with a compound annual growth rate (CAGR) of 16.8 per cent over the period. Moody's expects that this year, the sector will witness growth similar to that of the previous year on the back of governments making an increasing number of insurance products compulsory. It argues that the region, in spite of delayed oil price growth and increasing political instability, will benefit from a generally stable sovereign creditworthiness. Four of the six GCC sovereigns are rated Aa3 or higher by Moody's, with all six being investment grade and four having a stable outlook. The report, titled GCC Insurance Industry: Growing Economy Will Drive Further Market Growth Over Next Two Years, also forecasts that the region's insurance market will continue to grow at strong rates over 2016-18, supported by the increased economic wealth in the region and rising insurance penetration, which is currently well below 2 per cent of GDP. Another report, released earlier this month by Alpen Capital, noted that the region's insurance industry is expected to reach a size of $ 49.0bn by 2020 at a 14.1 per cent CAGR. It also expects that insurance premiums for the period 2014-2020 will witness a growth of 18.7 per cent CAGR to reach $62.1bn by 2020. Meanwhile, Moody's notes that the positive growth outlook on the region will continue to attract domestic and foreign insurers to invest in the GCC markets. "This is likely to increase competition and put even further pressure in what is already a weak-to-average profitability in the sector," says Mohammed Ali Londe, Moody's Assistant Vice-President. "However, insurers in the region are generally strongly capitalised and possible future pressure on profitability is unlikely to reduce the credit strength of the sector in the medium term," he adds. Within the GCC region, the UAE, the largest market in the region, produced more $9.1bn of insurance revenues last year, nearly 41 per cent of the premiums written in the region. The country's insurance market grew at a CAGR of 15.9 per cent from 2006 to 2014.
