The Central Bank of Bahrain (CBB) delighted to present the Insurance Decennial Report 2010, which is the first such report of its kind in the region, the report highlights the performance of the insurance industry in Bahrain for a ten years period from 2001-2010 and analyses the insurance (both “conventional insurance & reinsurance” and “Takaful & Retakaful” business) by class of business in the Kingdom with touching upon the origin and the historical background of the insurance market in Bahrain.
The Bahrain insurance market posted continues annual growth over the period 2001-2010, with gross premiums increase steadily at a compound annual growth rate (CAGR) of around 15% to register BD 210.5 million in Bahrain Insurance Market in 2010 compared to BD 58.6 million in 2001. This is consistent with the rapid growth of the Bahrain’s economy as evidenced by the GDP with a CAGR of almost 12% over the same period. The insurance penetration has increased from 1.95% of GDP to 2.55% of GDP over the last decade. Similarly, the insurance density (average per capita expenditure on insurance) has increased with a CAGR of 7.5% over the said period.
A significant part of this increase attributed to a surge in Medical insurance from BD 1.76 million in 2001 to BD 31.75 million in 2010, showing a CAGR of almost 38% over the last decade. Growth was also reported under long-term insurance (life and savings products), registering an increase with a CAGR of 16% with a total of BD 51.36 million in 2010 compared with BD 13 million in 2001, comprise of almost 24% of the gross premiums written in 2010.
The total assets of insurance firms in the year 2010 stood at BD 1,360.5 million compared to BD 680.9 million in the year 2006, showing a CAGR of almost 19% over the period 2006-2010. Similarly, the investment portfolio of Bahraini insurance firms increased from BD 352.78 million in 2006 to BD 474.6 million in 2010 showing a CAGR of almost 8% for the said period.
Bahrain's domestic insurance market comprises of 27 locally incorporated firms and 11 overseas insurance firms (branches of foreign companies) carrying out insurance, reinsurance, takaful, retakaful and captives business in the Kingdom of Bahrain. The locally incorporated firms consist of 14 conventional insurance firms, 7 takaful firms, 2 reinsurance firms, 2 retakaful firms and 2 captives, while overseas insurance firms consists of 8 conventional insurance firms and 3 reinsurance firms. In addition, there are a substantial number of firms restricted to business outside Bahrain and insurance ancillary services.
“The insurance sector in Bahrain holds tremendous promise for growth, as demonstrated by the industry’s strong performance not only during 2010 but over the last decade,” said Mr. Abdul Rahman Al Baker, Executive Director, Financial Institutions Supervision, at the CBB.
The Takaful industry continues to expand with overall gross contributions, of the firms operating in Bahrain, increasing significantly. The gross contribution have increased from BD 1.89 million in 2001 to BD 38.55 million in 2010 showing a CAGR of almost 40% for the period.
“Bahrain is fast becoming a hub for major regional and international reinsurance and retakaful firms as evidenced by the increasing number of such firms getting licensed in the Kingdom,” said Mr. Al Baker.
There are currently five conventional Reinsurance firms and two Retakaful firms in Bahrain. The gross premiums of Reinsurance and Retakaful companies have increased significantly to register D 323 million in 2010 compared to BD 43.18 million in 2001, showing a CAGR of 25% over the period 2001-2010.
The growth was also reflected in a healthy increase in employment in the insurance sector. Insurance firms employed a total of 1,726 people in 2010 (60% Bahraini) compared to 854 in 2001.
“We expect the insurance sector to continue its growth momentum in the coming years, mainly due to the increase in the public awareness on the importance of Life and Medical insurance as well as the introduction of new insurance products by the existing insurance firms” added Mr. Al Baker.
Gross premiums generated in the domestic market amounted to BD 210.48 million (US$ 558 million) in 2010, up from BD 58.59 million (US$ 155 million) in 2001.
Medical insurance witnessed a remarkable development especially during the last five years with rapid growth starting from year 2006. Premiums of Medical business rose from BD 1.76 million in 2001 to BD 31.75 million in 2010, showing a CAGR of almost 38% over the period 2001-2010. Medical insurance premiums represented 15% of the total premiums underwritten in the Bahraini market in 2010.
Long-term (life and savings products) insurance generating premiums amounted to BD 51.36 million (US$ 136 million) in 2010, an increase with a CAGR of 16% over the last ten years. The long-term market accounted for 24% of the total premiums generated during 2010.
Motor insurance constituted the single largest class of business, generating premiums amounted to BD 57.47 million (US$ 152 million), with a CAGR of 10% over the period 2001-2010. Motor insurance accounted for 27% of the premiums market in 2010.
Fire, Property & Liability insurance premiums represented 17% of the total business underwritten in the market. Fire, Property & Liability insurance premiums totaled BD 35.66 million in 2010 (US$ 95 million) compared to BD 8.67 million (US$ 23 million) in 2001, showing a CAGR of almost 17% over the period 2001-2010.
Marine and Aviation insurance premiums registered BD 8.04 million (US$ 21 million) in 2010 compared to BD 4.07 million (US$ 11 million) in 2001, showing a CAGR of almost 8% over the period 2001-2010.
“Due to the well established regulatory regime, a number of leading international insurance companies establish their insurance and reinsurance operations in Bahrain both in Conventional and Takaful, which has further consolidated Bahrain global profile as a centre for finance. The increase of insurance ancillary services in Bahrain provides an important source of synergy to these international companies” said Mr. Nader Al Mandeel, Director, Insurance Supervision Directorate, at the CBB.
“The CBB continues to further enhance its regulatory framework to be in line with the best international financial standards and boost the confidence of the insurance licensees and general public” added Mr. Nader Al Mandeel.
It should be noted that the CBB gained many insurance awards in recent years. The CBB was named ''Best Financial Centre'' at the second annual International Takaful Awards at a ceremony held in London. In addition to "The Best Regulator Initiative of the Year" in insurance at the Middle East Insurance Awards which organized by Insurex in Dubai in 2010.