The massive potential of the insurance industry in developing economies should prompt regulators to formulate dynamic steps to achieve a balance between regulations and market development, according to Mr Abdul Rahman Mohammed Al Baker, Executive Director of Financial Institutions Supervision at the Central Bank of Bahrain (CBB).
In his keynote speech at the 20th Conference for the Association of Insurers and Reinsurers of Developing Countries (AIRDC) in Bahrain on Tuesday, Mr Al Baker noted that the theme of the conference, “Transforming the Insurance Industry in Developing Countries”, was timely and important as the insurance industry is undergoing serious transformations with major developments taking place in developing economies.
Insurers are making great efforts to increase insurance penetration, which stands under 2% in developing countries against an average of 7.3% in developed countries and around 10% in the EU states. Mr Al Baker expects a market size of between 2-3 billion insurance policies in developing economies, which represents a huge potential for insurers. To reap the benefits of such potential, he urged regulators to encourage insurers to promote new lines of businesses such as takaful and microinsurance.
He attributed the healthy growth of the insurance industry in the GCC mainly to economic development. The region’s GWPs tripled between 2006 and 2015 to exceed US$24 billion. He added that regulatory developments have been in line with this evolution. For instance, the implementation of compulsory healthcare insurance schemes and government support for takaful have been instrumental in achieving growth.
Mr Yassir Albaharna, CEO of Arab Insurance Group (Arig), noted that this was the first time the AIRDC conference is being held in the Arab region. He called upon players from developing countries to take advantage of this lively forum to look into the latest trends in the insurance industry. He said the theme of this year’s conference reflected AIRDC’s keen interest in promoting insurance developments, attracting top executives in the insurance industry and rejunevating the association's presence in the region.
He observed that having more than 300 delegates representing more than 30 countries at the AIRDC was a good sign that the association is gaining the necessary momentum. Organised by Arig, in collaboration with the CBB, Bahrain Insurance Association and AIRDC, the two-day conference which ended yesterday discussed various issues concerning the insurance industry including the digital transformation of insurance operations.