Growth in gross premiums in the Takaful and Takaful Tawuni insurance sector in the GCC slowed significantly to less than 1 per cent in 2016. The slowdown follows years of annual growth in gross premiums of up to 20 per cent, which was mainly driven by the introduction of new mandatory covers, as well as strong increases in premium rates in Saudi Arabia, as new covers and actuarial pricing guidelines were adopted.
These are the findings of a new report called Islamic Insurers In The Gulf Cooperation Council Continue To Face Headwinds, Despite Better Overall Profits. The report was complied by S&P.
“Now that more policies are adequately priced, overall premium growth has slowed,” said S&P credit analyst Emir Mujkic. “The slowdown in premium growth has also been influenced by lower economic activity across all GCC states, as governments are trying to reduce or delay their spending due to lower revenues from hydrocarbon sales,” Mujkic added.
Despite the slowdown, the pre-tax net income of the publicly listed companies in the sector improved materially to about $683m in 2016, from about $274m in 2015, mainly as a result of rate increases in Saudi Arabia following the introduction of actuarial pricing.