The combination of very low current insurance penetration with a very high cession rate makes the Gulf region of the Middle East particularly attractive to foreign reinsurers, but market data remains hard to come by. With this in mind, the Qatar Financial Centre Authority has launched a biannual survey aimed at enhancing transparency and raising global awareness of the Gulf Cooperation Council (GCC) reinsurance marketplace.

The “GCC Reinsurance Barometer”, as the survey is titled, is based on interviews with key executives at 28 major reinsurers, brokers and buyers. The findings represent the expectations of these participants for development of the market over the next 12 to 24 months. 


None of the survey participants expected reinsurance prices to increase, and over 70% of respondents expected rates to decline even further in the next 12-24 months. Profitability is predicted to remain stable or slightly down, but the squeeze on margins is regarded as acceptable given the absence of catastrophic claims and relatively stable loss ratios.

Retention levels in the region have traditionally been among the lowest in the world, with on average about 46% of non-life premiums ceded. Retention of risk by GCC insurers is slowly increasing and about 40% of survey participants said they expected this trend to continue, citing consolidation within the domestic insurance market, pressure from rating agencies and improved technical expertise of cedants as drivers for change.

The most profitable lines of reinsurance business are engineering and construction, energy and marine cargo, followed by casualty. Some country specific regulatory factors complicate the picture, for example the compulsory health insurance regimes in Saudi Arabia and Abu Dhabi, which make medical insurance the fastest growing but also one of the least profitable lines of business as a result of the limited scope for risk selection. Other lines expected to see rapid growth are engineering and construction, energy and family Takaful insurance (Takaful is an Islamic insurance concept which is grounded in Islamic muamalat (Islamic banking), observing the rules and regulations of Islamic law) – Shari’a compliant life policies.


Overall, the outlook is optimistic. Underlying economic growth in the region is forecast at 4.9% per annum for 2010–2014 and total premium volume is expected to increase from US$16 to US$20 billion over the same period. On this basis, the size of the non-life reinsurance market is estimated at US$4.8 billion. 

Despite over-capacity and perceived low pricing, the GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) remain an attractive destination for global reinsurers and capacity is expected to increase further, driven by a large number of infrastructure projects, limited exposure to catastrophe risk and the scope for increased insurance penetration. This growth in capacity is expected to come largely from regional, including Asian, providers rather than “traditional” reinsurers in London, mainland Europe and Bermuda.

The key measures adopted by the Barometer survey are intended to form a benchmark for regular future monitoring of the GCC reinsurance sector, and should provide a useful starting point for market research in future years.