The property insurance market in the Middle East and Africa expected to grow steadily

In the 2022 outlook for the Property Insurance Industry in the Middle East and Africa, as presented by GlobalData, it is reported that the region experienced a noteworthy recovery with an estimated growth of 4.4% in 2021. This rebound followed a contraction of 0.3% in 2020, primarily attributed to the economic repercussions of the COVID-19 pandemic.

Key drivers of the property insurance industry in the Middle East and Africa continue to be the traditional sectors, such as oil and gas, and mining. Additionally, the African markets saw a surge in property insurance demand linked to infrastructure and construction developments. The region's susceptibility to extreme weather events, including floods and droughts, coupled with its economic reliance on agriculture, indicates that parametric insurance, particularly with a focus on weather-index insurance, is expected to be a pivotal theme for the property insurance industry in the coming five years. Insurtech advancements have also been observed in the regional insurance landscape. Notably, in September 2021, Willis Re introduced a new flood model in Saudi Arabia, Morocco, and the UAE in collaboration with KatRisk. This model empowers insurers to assess and quantify flood risks accurately, allowing for the precise pricing of policies. The model proves particularly valuable in managing profitability by modeling unpredictable pluvial flooding risks.

Civil disturbances and terrorism remain significant concerns in the region, prompting a focus on insurance coverage for strikes, riots, civil commotion (SRCC) clauses, war, and terrorism. The unrest in South Africa in July 2021 resulted in substantial business interruption claims for insurers, particularly relating to supply-chain disruption, loss of production, and store closures caused by the riots. According to the report, South African insurer Sasria SOC Ltd is anticipated to face claims of up to ZAR20 billion ($1.35 billion) for property damages during the July riots.

The competitive landscape in the region is expected to improve with the easing of Foreign Direct Investment (FDI) regulations and increased capital requirements in several Middle Eastern markets, including the UAE, Kuwait, and Qatar. This has facilitated the entry and expansion of foreign insurers into these markets. Notably, Axa SA, American International Group, Inc., and Allianz SE emerged as international insurers among the top 10 insurers in 2020, collectively representing 11.3% of the property insurance business in the region. Saudi Arabia, with four insurers among the top 10, contributed significantly, accounting for a combined 23.5% market share. These insurers include the Company of Cooperative Insurance, Al-Rajhi Insurance Company Limited, Saudi Re for Cooperative Reinsurance Company, and The Mediterranean & Gulf Cooperative Insurance & Reinsurance Company.