The insurance industry has generally failed to capitalise on Qatar's recently booming economy, but a series of initiatives aimed at broadening the sector's customer appeal may help it to get in on the action.
Currently, Qatar has the lowest insurance levels of any of the Gulf Co-operation Council (GCC) members. A recent study conducted on behalf of the Qatar Financial Centre (QFC) predicted that insurance would account for just 1.3% of savings by 2009, of which 1.2% will be for non-life policies and a mere 0.1% for life insurance.
By comparison, the report forecast that penetration rates would be a regional high of 4.25% in Bahrain, 4.1% in the United Arab Emirates, 3.6% in Kuwait, 2.4% in Oman and 2% in Saudi Arabia.
Much of Qatar's existing insurance market is focused on general coverage, with the majority of policies being issued for property and motor insurance. According to another QFC report, while premium payments in Qatar would reach $1.48bn by 2013, most of this would be for property and accident risk coverage.
With the state picking up many health services costs, there is less incentive for citizens to take out private medical insurance than in other countries, and life insurance has yet to catch on.
One of the reasons for the low uptake of personal and life insurance policies in Qatar, and indeed across the Gulf region, is the relatively low level of Sharia-compliant insurance products currently available. Many traditional insurers invest premium payments in interest-generating facilities, which render them noncompliant with Sharia law. Whilst this is common procedure in the international insurance industry, it prevents many in the Muslim world from investing in traditional insurance.
A response to this lack of penetration in markets such as Qatar has been the development of takaful insurance methods, which are based on Islamic banking procedures and follow the rules and regulations of Islamic law.
According to a report issued by Standard & Poors in early September, "Takaful could be the key to increasing insurance awareness and delivering on customer expectations, capitalising on the positive economic dynamics of the region."
The total GCC insurance market, based on annual premium payments of just $550 per capita, could increase from a mere $4.6bn at present to $20bn annually, the S&P report said. Plans by many international insurers and local firms to enter Qatar's takaful market are a positive development, the report said.
The QFC is also playing a role in reinforcing the country's insurance sector, announcing plans on September 7 to launch the Qatar Insurance Platform (QIP), a technology-based trading platform. Through the QIP, business clients would be able to obtain a policy quote from an international insurer electronically, speeding up the policy-issuing process.
The QIP seeks to help develop Qatar's insurance market and bring its growth in line with that of other booming sectors in the economy. Steve Martin, a spokesman for the authority that operates the QFC, told local media that the goal is to "provide access for the global insurance and re-insurance industry to a fast growing portfolio of GCC, Central and Southern Asian risks for structuring and placement."
In addition, at the beginning of September, the QFC unveiled plans to set up a training institute offering accredited courses covering subjects such as insurance, wealth management and banking. The objective of these courses will be to generate staff that can then further develop the Qatari insurance and financial industry, QFC officials said.
A number of Qatari firms are looking to both increase their exposure to the insurance market and to offer a wider product range. On September 2, Standard Chartered Bank, Qatar, launched Bancassurance. The new service, operated in partnership with ALICO AIG Life, a subsidiary of American International Group, will initially provide insurance and savings schemes covering retirement and education packages, with plans to expand into medical and personal accident, group life, pensions and annuities and traditional life insurance.
Rasha Badawi, head of Wealth Management and Shared Distribution at Standard Chartered Bank, said the product range had been designed with the bank's local customer base in mind.
"The plans have been specifically tailored to address the needs of the growing Qatar market," she said at the launch of Bancassurance.
Additionally, the Qatar Islamic Bank (QIB) announced in mid-August its plans to establish a takaful insurance company, with bank CEO Salah Jaidah saying there was a need for such companies in the region.
"We are constantly looking at opportunities with takaful insurance companies. We will be taking advantage of having takaful insurance subsidiaries," he told local media on August 12.
It remains to be seen if the new range of insurance products coming on to the market will draw Qataris. But with Qatar's economy expanding and diversifying and companies actively promoting the investment protection that insurance can provide, the sector looks set to expand.