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Kuwait Insurance Report Q1 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: February 2008 Product Code: R302-2116 Description Key Insights On Kuwait’s Insurance SectorThis report differs from its predecessors in that it includes BMI’s Insurance Business Environment Rating(IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI’sCountry Risk Rating (CRR). It is now much easier to consider the business environment for the insurancesector in any one country relative to the business environment for other industries in that country that aresurveyed by BMI, and the business environment for the insurance sector in other countries.Kuwait’s IBER is 45.3. Relative to other countries in Middle East and Africa, it is a moderately attractiveinsurance market for foreign insurers. Within the region, Kuwait stands out for the country structure scoreon the IBER, this is the result of high scores for financial risk, external risk and policy continuity.However, the IBER is held back by the underdevelopment of the life segment and non-life segment aswell as GDP volatility. Kuwait Insurance Report Q1 2008 Over the forecast period, we anticipate that non-life premiums will grow by 15% annually in localcurrency terms and by 15% in US dollar terms. Life premiums are expected to increase by 10% annuallyin local currency terms and by 11% in US dollar terms. The key drivers of growth in the non-life segmentin 2007-2012 are the anticipated rise in nominal GDP from around US$103bn to US$130bn and anexpected increase in non-life penetration from 0.53% of GDP to 1.00%. The key driver of growth in thelife segment is the envisaged rise in life density from a miniscule US$65.06 per capita in 2007 to US$90per capita in 2012, and the rise in population from 2.99mn to 3.62mn. Although Kuwait’s life segment is growing very rapidly from a very low base, its small absolute size, andthe entrenched positions of the local firms mean that other cross-border firms are unlikely to enter themarket. In both life and non-life segments, takaful insurance appears to be better developed in Kuwaitthan in other markets in the region. Kuwait may emerge as a significant centre for takaful. However, inthis respect, it faces competition from the UAE and Bahrain. The bulk of exports - namely oil - are denominated in US dollars, and since January 2003 the country hasmaintained an explicit peg against the US dollar, limiting any convertibility risk. This contributesincreasing the IBER for country structure. However, oil accounts for almost 50% of GDP, more than 80%of government revenues, and over 90% of total export earnings, with the non-oil economy still relativelyunder-developed. This makes Kuwait highly vulnerable to exogenous shocks, especially in relation toworld oil prices. Similarly, the extreme volatility of has a negative impact on Kuwait’s IBER. Table of Contents
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