MENA Reinsurance Markets Upbeat Says QFCA Report

Monte Carlo, September 14 (QNA) - Middle Eastern and North African reinsurance markets continue to benefit from the region's robust economic expansion, according to the 2014 edition of the MENA Reinsurance Barometer published Sunday. Growing insurance premiums and a relatively low exposure to natural perils are the main attraction, which drives the unabated increase in reinsurance capacity, says the survey, issued annually by the Qatar Financial Centre (QFC) Authority. The report also found that fierce competition, intense pricing pressure and higher risk retentions by ceding companies weigh on the sector's growth prospects. The 2014 Barometer is based on in-depth interviews with senior executives from 34 international and regional reinsurance companies and intermediaries operating in the region. As in 2013, the survey participants consider the region's robust GDP and insurance market growth as the foremost relevant strength of the reinsurance marketplace. QFC Authority Chief Executive Officer and Board Member Shashank Srivastava said, "Due to its compelling fundamentals and expanding capacity, the MENA region continues to be an attractive destination for global reinsurers. "As a leading business and financial centre, the QFC Authority will continue to support growth across a range of sectors in Qatar and the region by offering world-class business infrastructure and enhancing market transparency through thought-leading reports like this one." Since 2008 the region's economies grew at an inflation-adjusted rate of 4.0% per annum, well above the global average of 2.9%. A strong pipeline of infrastructure and construction projects and a relatively low natural catastrophe exposure further contribute to the regions attractiveness. However, the MENA reinsurance markets are characterized by excess capacity, which translates into fierce competition and unsustainable levels of pricing. Deficiencies in regulation, such as insufficient minimum capital requirements, but also low levels of risk retention by ceding companies are perceived as key obstacles towards a sound and sustainable premium growth. The regions low insurance penetration with total premiums accounting for just 1.4% of GDP, a mere fifth of the global average, is seen as a major long-term and structural driver of insurance and reinsurance market growth. (QNA)