All together now: The major insurance centres of the Gulf are exploring regulatory harmonisation

In February 2015 the leading participants in the region’s insurance market came to Bahrain for the Middle East Insurance Forum, an annual event which has become the largest and most influential industry gathering in the Gulf. Staged under the official patronage of the Central Bank of Bahrain (CBB), the event attracted around 500 attendees, from over 200 leading global organisations, to listen to more than 50 international speakers and industry leaders.

Growing Alignment

As the host of the 2015 event, Bahrain was able to pursue themes of its own interest. One example was the opening plenary address given by the CBB’s executive director for financial institutions supervision, Abdul Rahman Mohammed Al Baker, who called for increased regional cooperation and the standardisation of market practices across the GCC. Behind the CBB’s announcement lies an environment of increasing competition in regional insurance markets. The growth of the global market, projected to reach over $4trn in worldwide revenue, combined with the positive macroeconomic trends of emerging regions such as the Middle East, has increased the need for MENA regulators “to work closely to strengthen regulatory frameworks to create greater harmony amongst the different jurisdictions so that the industry can capitalise on growth opportunities”.

Emerging regulatory centres in such countries as the UAE and Qatar, which are seeking to become centres for insurance, have resulted in heightened regional competition. An unfortunate by-product of this is a tendency in some jurisdictions to pursue business by cutting premiums and ignoring the risk-based approach to premium pricing that the global industry is moving towards. In calling for harmonisation, the CBB is also calling for proper underwriting and risk assessment across the GCC so that business can be pursued on the basis of issues such as service levels rather than by unsustainable cuts in premiums.

Regional Moves

Regional cooperation at this level is a notoriously complex process. Previous attempts to harmonise GCC insurance regulations have collapsed in the face of significant differences in areas such as foreign ownership, capital requirements and licensing criteria. The varying supervisory mechanisms deployed across the region complicates things even further, with central banks providing direct oversight in some cases, independent insurance authorities providing similar oversight in others and, in the case of Kuwait, the Ministry of Commerce and Industry retaining the supervision mandate. However, momentum appears to be building behind the idea of a unified approach; in May 2015, Al Baker’s call was taken up by the commerce ministers of the GCC, who agreed to the formation of a committee to examine the matter of harmonisation.


Bahrain would enter any regional harmonisation process from a leading position, having already established a reputation for successfully balancing regulatory enforcement with the practical requirements of expanding insurance firms. The regime observes all the essential criteria, core principles and methodology of the International Association of Insurance Supervisors (IAIS), and the CBB is the only representative from the MENA region to sit on the IAIS’s Executive Committee. Bahrain’s insurers, many working throughout the region already, would also benefit from better market integration, as this would seal Bahrain’s position as a test site for new products and a base for regional operations, while removing the pressure to move to larger markets.

However, the oversight standards in some regional jurisdictions have not progressed as quickly, and insolvencies due to overly competitive pricing have threatened to tarnish the regional industry. Bahrain, therefore, would gain substantially from the enhanced reputation that a harmonised, risk-based approach to GCC insurance regulation would result in.