The Bahrain insurance market posted its strongest-ever annual growth during 2006, with gross premiums surging by 22% over 2005.

Life insurance contributed the lion’s share of the growth, soaring by nearly 47%, with fire and the traditionally strong motor business also growing robustly by 23% and 13% respectively.

The profitability of insurance firms rose by 27%, while their total assets grew by 22%.

The number of insurance firms operating in the domestic market during 2006 totaled 27, of which 18 were locally-incorporated firms and 9 were branches of foreign firms.

“The insurance sector in Bahrain holds tremendous promise for growth, as demonstrated by the industry’s strong performance not only during 2006 but in several recent years,” said Mr. Abdul Rahman Al Baker, Executive Director, and Financial Institutions Supervision, at the CBB.

The economic boom taking place in Bahrain and the region, renewed Government investment in large infrastructure projects and strong private sector investment in real estate and other economic sectors are contributing to the expansion of the insurance sector. In addition, increasing public awareness and acceptance of insurance is also contributing to the growing demand for insurance products, both conventional and Islamic. “We expect the insurance sector to continue its growth momentum in the coming years as significant investments continue in infrastructure, real estate and industry and with the introduction of compulsory health insurance for expatriates,” said Mr. Al Baker.

On its part, the CBB is committed to advancing the promising insurance sector by providing a clear and transparent regulatory framework and a business-friendly environment for providers of insurance services.

Gross premiums generated in the domestic market amounted to BD115.9 million (US$308 million) in 2006, up from BD94.9 million (US$251 million) in 2005.

Life premiums amounted to BD24.3 million (US$64.6 million), an increase of 46.5% over the 2005 figure of BD16.6 million (US$44 million). The life market accounted for 21% of the total premiums generated during 2006.

Motor insurance constituted the single largest class of business, generating gross premiums worth BD41.8 million, an increase of 13.3% over BD36.9 million (US$97.6 million) in 2005. Motor insurance accounted for 36% of the premiums market in 2006.

Fire premiums grew 22.7% to BD18.2% (US$48 million) in 2006, from BD14.8% (US$39.3 million) in 2005, while premiums from marine insurance amounted to BD7.1 million (US$18.8 million) in 2006, compared with BD5.9 million (US$15.7 million) in 2005. The fire class accounted for 15.7% of total premiums in 2006, while marine represented 6%.

Miscellaneous insurance, which includes medical, personal accident, contractors’ risk, liability, money, casualty guarantee, represented the remaining 21.1% of the insurance market, generating gross premiums worth BD24.5 million (US$65 million) in 2006, up from BD20.7 million (US$55 million) in 2005.

The reinsurance market comprised five registered companies, of which one is a retakaful company. Total gross reinsurance premiums amounted to BD73.3m (US$195m) in 2006. “The CBB is committed to advancing the promising insurance sector by ensuring a clear and transparent regulatory framework and a business-friendly environment for insurance services providers,” said Mr. Tawfiq Shehab, Director, Insurance, at the CBB.

This has helped attract several international insurance giants to establish their Middle East hubs in Bahrain. The presence in Bahrain of such names as American Insurance Group (AIG), Hannover Re, Allianz, ACE Group and New Hampshire will help expand and advance the industry further.

Source: Central Bank of Bahrain (CBB)