On building a regulatory framework and consumer awareness to support growth
How are insurance companies in Bahrain adapting to emerging market segments and evolving demand patterns?
MOJALI: In 2023 Bahrain’s insurance market saw significant growth, a trend that we are predicting will continue in 2024. This trend is primarily driven by two key factors: the increase in investment activity within the country, and higher interest rate levels that have emerged as a result of global monetary tightening. Beyond these drivers, the recent implementation of mandatory health insurance is set to broaden the scope of gross written premium, signifying yet another favourable turn for the insurance market upon its initiation.
There is room for organic growth beyond traditional health, motor and property insurance. This is particularly the case with directors’ and officers’ liability, as well as cybersecurity risks. Moreover, new niche needs are emerging. For example, in the motor segment, coverage for electronic vehicles requires addressing specific risks, and in the property segment the same applies to the installation and use of solar panels. At the same time, during the Covid-19 pandemic there was a shift in perception regarding the importance of life insurance and coverage for unemployment. The financial sector has a clear stake in supporting insurers in deepening the penetration of life insurance, since this is a relevant factor in the credit environment, including the mortgage market.
In times of heightened uncertainty, there is an opportunity for insurers to facilitate a reassessment of the gap between covered and uncovered risks, particularly in the corporate segment. In Bahrain and the Gulf region in general, there is a pervasive culture that sees insurance as a cost to be contained, not as a business tool for proper risk management and strategic stability. Therefore, more awareness is needed for society to understand the value of insurance, and efforts at educating the public should be matched by an orientation towards flexibility and partnerships between insurers and service providers to develop the right products.
In what ways could the regulatory framework for the insurance sector in Bahrain support further insurance penetration and an improvement in the quality of services?
MOJALI: The effective digitalisation of the insurance sector requires more than proactivity on the part of insurers to streamline and digitalise customer services. Behind this front end, there is a myriad of interactions with service suppliers that requires a platform-based approach to ensure efficient integration and effective service provision. While the Central Bank of Bahrain has led important initiatives to shape the digitalisation of insurance, coordination across all relevant regulatory bodies, including the Ministry of Health, the Ministry of Industry and Commerce and the Telecommunications Regulatory Authority, is necessary to ensure that all companies in the ecosystem are sufficiently digitalised. At present, the level of digitalisation within the ecosystem is still lacking.
Regarding a deeper adoption of insurance as a tool for risk management, Bahrain could benefit from a re-examination of compulsory coverage. Beyond raising awareness of the value of insurance, there might be a need to revisit the introduction of compulsory insurance beyond the motor and health segments. This is particularly applicable to industrial risks, an area where small- and medium-sized enterprises tend to have insufficient risk management practices and lack clarity on minimum coverage requirements.
Finally, from the standpoint of the contribution of the insurance sector to GDP and in-country value, the regulator could provide systematic assistance to ensure a higher percentage of the value derived from insurance policies is retained by Bahraini insurers and, consequently, stays within the economy. This becomes particularly important in the context of policies that involve a global insurance provider, where the role of the local player is often relegated to administrative tasks. By supporting value retention within the country, the regulator would aid in bolstering the domestic insurance market.
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