How do the experts at S&P Global Ratings think 2018 will unfold?
As we take our first steps into 2018, S&P Global Ratings’ managing director and regional head for the Middle East, Hadi Melki, presents an analysts’ outlooks on five sectors across the Gulf
“For the regional insurance markets, gross premium income will continue to increase by up to 10 per cent in the GCC in 2018, outpacing our GDP forecasts. However, premium growth in the GCC insurance market will highly depend on new regulations and types of insurance cover, as well as government infrastructure spending in 2018. We also believe that the insurance markets in the GCC are likely to remain profitable in 2018, as companies gradually move toward more risk-based underwriting.
“We believe regulatory compliance and the implementation of VAT will be key challenges for insurers in the GCC’s two largest insurance markets – the UAE and Saudi Arabia – in 2018. While new risk-based regulations will be fully adopted in the UAE from January 2018, insurers in Saudi Arabia will be subject to on-going regulatory requirements as seen in 2017, when a number of companies were suspended from writing new business, due to non-compliance with applicable regulations.
“The timely implementation of VAT will be another key challenge for insurers in these two markets, as final rules of the new tax regime only became clear in late 2017. The introduction of VAT, which will be applicable on motor insurance and other non-life related products, except for medical insurance, is expected to lead to some rate increases.
“Overall, we expect that credit conditions for the insurers that we rate in the GCC will remain broadly stable in 2018, despite ongoing economic challenges in the region.”
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