Foreign insurers need adaptability in potentially lucrative Gulf market

International insurers seeking a bigger share of the potentially lucrative Gulf market need to adapt quickly to regulatory changes and tap into growth areas like Islamic finance or risk being muscled out of consolidation.
With a penetration rate of around 1 percent of gross domestic product, the overall Middle Eastern insurance sector lags mature markets but its huge growth potential has already attracted global heavyweights such as AXA and Allianz.
However, the sector’s regulatory framework is transforming rapidly and some multinationals remain cautious in developing their Islamic product offering, giving domestic competitors such as Abu Dhabi National Insurance Company, Saudi’s Tawuniya and Qatar Insurance Company the chance to build a dominant position.
Within insurance, the life segment and takaful in particular holds the biggest potential in the region. Premium income in life insurance in Saudi Arabia, for example, soared 61 percent last year, boosted by strong demand for sharia-compliant products, while non-life grew 25 percent according to Swiss Re’s “World insurance in 2009” report.