Qatar's insurance industry has room for new players as the market was traditionally dominated by a few local insurers. Total insurance premiums reached $1 billion in 2010 and are expected to double by 2015. While most business is currently non-life, companies are financially stable. Takaful operators have grown faster than conventional insurers and have an advantage since Islamic banks cannot sell conventional insurance. With low insurance penetration, a growing economy, and demand for Islamic products, Qatar presents great opportunities for insurers and takaful companies to expand through bancassurance partnerships with banks.

1. www.meinsurancereview.com July-August 2013 59
BancaTakaful
Qatar’s insurance industry – room for new
players
For many years, Qatar’s insurance market was dominated
by a few local insurers which were part of a large business
group or government, and were very well-supported in
terms of business by their parent companies. However,
during the last few years, we have seen the entry of many
new insurers, both local and international, increasing
competition and forcing insurers to innovate and actively
seek the opportunity to tap the retail market, both for
the life and non-life businesses.
Total underwritten premium was US$1 billion in 2010,
and the industry is expected to double its size by 2015.
Composite insurers are allowed. There are a number of
conventional insurers, takaful operators and windows
in the market. However, the market is not over-crowded
yet, and there is room for new players, especially in the
takaful sector.
Although most business underwritten is non-life,
companies are on strong footings where their financial
health is concerned. Traditionally, companies were
not required to put much effort on distribution as the
business would come through direct channels. Even
brokerage is a recent phenomenon. In the absence of
effective distribution channels, bancassurance can play
a major role in exploiting the potential of the market.
Qatar’s banking sector – robust and
progressive
While almost all the banks offer insurance products,
it may take a while for insurers in Qatar to consider
bancassurance as a major distribution channel.
Qatar’s banking industry is robust and progressive.
There are 14 conventional banks and four dedicated
Islamic banks in the country. Bank branches number
around 250 in total. Banks have the resources and the
will to reach out to the retail market with products
suited to customer needs.
Presently, the major product offered through banks
is credit life. Products with investment elements are not
widely offered in the market. Only insurers registered
with Qatar Financial Centre (QFC) Authority are allowed
to offer insurance products with savings element. Local
insurers which were regulated by Ministry of Commerce
earlier and now by the Qatar Central Bank (QCB) are
not allowed to offer savings plus protection products.
However, it is expected that very soon, local insurers
will be able to offer investment-linked policies which
normally drive bancassurance volumes.
Bancatakaful in Qatar
A great opportunity
There is room for both takaful and bancatakaful to expand in Qatar due to the demand
for Islamic products and low barriers to market entry, says Mr Pervaiz Ahmed of
Qatar International Islamic Bank.
W
ith its very low insurance penetration, high per
capita income and rapidly growing economy,
the Qatar market has great prospects for growth
in the insurance and takaful businesses. However, in
order to tap the market, insurers should offer products
suited to the customer needs and distribute them
properly. Banks would be instrumental in distributing
the products as many of them are looking to increase
their fee-based income.
Considering the government’s interest to grow other
sectors of economy, especially the financial service sector,
and to reduce the economy’s reliance on the hydrocarbon
industry, there are strong growth prospects for the insurance
industry.
GDP growth of Qatar clearly shows the prospects of
strong growth in all sectors
GCC: Real annual GDP growth (2006-2014)
6%
5%
3%
5%
7%
5%
13%
8%
3%
4%
3%
5%
2006-2010
2010-2014
Bahrain Kuwait Oman* Qatar Saudi
Arabia
UAE
Source: EIU
* Estimate of GDP for Oman
does not include 2013-2014
Low insurance penetration and high per capita income
presents opportunity for insurers
Insurance penetration 2009
(Premiums vs GDP growth)
GDP per capita (log scale) (US$)Source: World Bank
6%
2%
4%
12%
8%
10%
16%
14%
18%
India
China
Japan
US
Germany
Kuwait
UAEBahrain
Oman
Saudi Arabia
PremiumsasapercentageofGDP
500 5,000 50,000
UK
Qatar
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2. 60 July-August 2013 www.meinsurancereview.com
BancaTakaful
Takaful business growing fast
Takaful is not new to the Qatari market. In fact, one
of the first takaful companies in GCC was launched in
Qatar – the Qatar Islamic Insurance Company (QIIC). The
company commenced business in 1995 and has done well.
Considering the success of QIIC and responding to
market demand, many new takaful players recently
entered the market. There are three window operators
and four dedicated takaful companies operating in
the market. All the takaful companies, except one, are
composite. Only MedGulf Allianz underwrites life-only
takaful business. It is also the only takaful company
licensed by the QFC.
With the introduction of many new players, takaful
business is growing faster than its conventional
counterpart. Takaful companies have been successful in
providing a full range of products, backed by the high
quality of customer service. Recently, a local takaful
company was appointed as a third-party administrator
for the new National Health Insurance Scheme.
Hopefully, this will increase takaful’s share.
Takaful companies have an advantage
Until recently, banks were allowed to offer Islamic
banking products through window operations, but
in 2011, the QCB disallowed conventional banks from
offering Islamic products. However, conventional banks
are not barred from selling takaful products from their
conventional branches. Hence for takaful companies,
the market is wide open – they have an advantage over
their conventional counterparts as Islamic banks are not
allowed to sell conventional insurance products due to
Shariah reasons.
With the Central Bank now regulating the insurance
industry, the industry is expecting to face a similar
situation, ie, in the longer run, takaful windows may
not be allowed to operate. However, the final verdict has
yet to come from QCB.
There is a strong demand for Islamic products from
banking customers. Both Islamic and conventional
banks are willing to offer products which can provide
both protection and investment options. As mentioned
earlier, local companies are not allowed to underwrite
investment-linked products, hence for banks the options
are limited as far as takaful products are concerned.
The opportunity
To enter the market, potential investors have multiple
options and there are hardly any barriers to entry.
Existing players, on the other hand, can increase their
penetration by developing products suited to customer
needs and adopt innovative strategies to distribute and
service them effectively.
Mr Pervaiz Ahmed is Head of Insurance Products Business
Development & Marketing with Qatar International Islamic Bank.
He may be contacted at Pervais.Ahmed@qiib.com.qa
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