Bahrain's insurance sector boosted by consolidation and growth of new players


With 36 insurance and reinsurance companies in operation as of December 2017, Bahrain’s insurance sector is well developed, particularly when taking into account the size of the economy by both GCC and emerging market standards. According to the Central Bank of Bahrain (CBB), the market comprised 14 conventional locally incorporated firms (including two reinsurers), 12 branches of foreign conventional firms (including three reinsurers), and eight takaful, or Islamic insurance, firms (including two re-takaful, or Islamic reinsurance, firms). The market also includes 32 insurance brokers and 25 firms licensed to operate outside of Bahrain.


Net profits across the sector stood at BD34m ($90.1m) for 2016, according to CBB figures, up from BD24.1m ($63.9m) a year earlier. This was thanks to a sharp increase in investment income, and despite the industry posting an underwriting loss of BD18.7m ($49.55m). For the first nine months of 2017, the last period for which data was available at the time of writing, insurance firms posted net profits of BD36.4m ($96.5m), up from BD29.3m ($77.6m) during the same period a year earlier.


The value of total insurance sector premium stood at BD286m ($757.8m) in 2017, according to figures from Swiss Re. This was up 3.8% on the previous year’s figures, but down 3% when accounting for inflation. For the first nine months of 2017 net premium were worth BD135.5m ($359m), up 2.7% year-on-year (y-o-y). Per capita premium stood at $577 in 2017, ranking the kingdom second in the GCC (behind the UAE at $1436), third in the Middle East and 39th worldwide.

Premium were equivalent to 2.2% of GDP, again the second-highest level in the GCC and ranking Bahrain ninth amongst emerging markets. The industry’s share of total GDP has been on the rise in recent years, from 1.97% in 2011, according to CBB figures, though as a share of non-oil GDP it has fallen back since a peak of 2.84% in 2014, to below the figure of 2.68% registered in 2011.

Major Players

Bahrain-Kuwait Insurance Company (BKIC) was the largest insurance firm by gross premium in the kingdom, with the BCC reporting total premium of BD26.2m ($69.4m) in 2016, the last year for which information was available. The firm is majority-owned by the Gulf Insurance Group, which has an equity stake of 56.12%, and which in turn is a joint venture between Kuwait Projects Company and Canadian insurance-focused financial services firm Fairfax Financial Holdings. The BKIC reported that its gross premium rose to BD59.5m ($157.7m) in 2017, thanks to its acquisition of local Islamic insurance provider Takaful International (TI). The firm had initially acquired a 40.9% stake in TI in 2015 and in April 2017 raised that to a controlling stake of 67.8%, turning TI into a subsidiary.

The second-largest firm in 2016, according to the CBB, was Bahrain National Insurance Company, with gross premium of BD22.4m ($59.3m). The firm is part of insurance-focused conglomerate Bahrain National Holding (BNH), which also operates life insurance company Bahrain National Life Assurance, motor assistance firm iAssist and other insurance-related holdings. BNH took in premium of BD28.9m ($76.6m) in 2017 and net earned premium of $15.8m ($41.9m), both up on the previous year. Profits were down, however, from BD3.9m ($10.3m) in 2016 to BD2.3m ($6.1m). BNI itself collected gross premium of BD22.4m ($59.4m) in 2017, including motor premium of BD13.1m ($34.7m). In third place was Life Insurance Corporation, a regionally focused life insurance provider, with Bahrain-based premium of BD20m ($53m). TI was the fifth-largest insurer, with premium of BD19.6m ($51.9m).

A new major player in the market is Islamic insurance provider Solidarity Bahrain. The company is the result of a merger that took place in December 2017 – namely of two former mid-ranking players, Solidarity General Takaful and conventional insurer Al Ahlia Insurance Company. The merger followed the acquisition by Solidarity’s parent company Solidarity Group of a 71.5% stake in Al Ahlia in September 2016. Based on the two pre-merger companies’ combined premium of BD29.4m ($77.9m) in 2016, the firm would have ranked as the largest insurance company that year. In 2017 the two had combined premium of around BD30.6m ($81.1m).

The authorities have been supportive of such merger and acquisition activity. “Consolidation is very healthy for the market and could turn some Bahraini companies into regional players,” said Abdul Rahman Al Baker, the executive director for financial institutions supervision at the CBB. “There are still a lot of insurance companies operating in the market, and while any decisions are up to their boards, the CBB would support further consolidation initiatives.”

Abhijit Singh, the assistant general manager for investments and special projects at Solidarity Bahrain, told OBG he thought further consolidation was likely to take place. “The low-hanging fruit has all been plucked but some smaller and weaker companies remain on the scene, some of which are likely to either eventually withdraw from the market or be absorbed by bigger players,” he said.

Life, Pensions & Retirement

The value of life insurance premium stood at BD52m ($137.8m) in 2017, up 1.2% on the previous year in nominal terms, but down 0.2% in real terms, according to Swiss Re figures. This gave per capita life premium of $105, a substantial figure for the region but low by the standards of Western countries.

Yahya Nooruddin, the CEO of T’azur Islamic Insurance and chairman of the Bahrain Insurance Association, argued that for the market to grow, more regional players offering life and savings products across the GCC will have to emerge. “Individual GCC markets do not provide enough life volume, especially as expatriates tend to prefer to insure with companies from their home country,” he told OBG. “However, the segment requires a lot of capital and many regional firms are not currently looking at it, with most focused on general insurance.”

Auto Coverage

Motor premium rose by 4% in 2016, to BD78.9m ($209.1m), while the first nine months of 2017 saw stronger growth of 5.9%. The auto segment is going through a period of regulatory reform. In 2016 the CBB introduced a standard contract for third-party liability car insurance.

“Previously, claims were sometimes treated inconsistently in areas such as amortisation and excess payments, which were not always clearly addressed in contracts in a way that clients understood,” Al Baker told OBG, adding that the number of customer complaints in the arena had fallen as a result of the changes. He added that the CBB is now also in the process of introducing similar changes for comprehensive car insurance contracts. “The reforms will allow for differences between contracts offered by different forms, but will provide for minimum basic coverage including making sure that certain basic procedures are in place when claims are made.”

Profitability in the segment has also been boosted by a stricter new traffic law that was enacted in 2015, as well as by accompanying measures such as new speed cameras. “There was a sudden drop in both claims frequency and severity in the second quarter of 2017, and they have remained at that lower level since then,” Singh told OBG.

Fire & Property

The value of fire, property and liability gross premium stood at BD40.3m ($106.8m) in 2016, the latest full year for which data was available, and down 15% on the previous year, according to figures from the CBB. Net premium were worth BD8.6m ($22.8m), more or less unchanged y-o-y, reflecting the fact that Bahraini insurers tend to pass on large risks to reinsurers.

Gross claims rose by 277% for the year, to BD8.3m ($22m); however, payouts by local firms were down, with net claims falling by 71% to BD1.1m ($2.9m). For the first nine months of 2017, gross premium in the segment were down again by 21%, though net premium were up 8.6%.

Health Insurance

Medical insurance is the second-largest insurance line in Bahrain, accounting for 27% of industry premium as of end-September 2017. The segment was the fastest-growing insurance line in 2016, with premium rising by 19% y-o-y and the second-fastest in the 12 months to September 2017 on growth of 7.4%, behind marine and aviation, which had contracted in 2016. However, as in many jurisdictions, margins in the market are tight. “Medical has been showing growth in the couple of years, but the loss ratio is high and hard to control for multiple reasons, including heavy competition and treatment cost inflation,” Nooruddin told OBG.

A law approved in May 2018 to introduce a compulsory medical insurance framework – in line with a wider regional trend towards such schemes – is likely to further boost premium growth. Under the law, which will come into effect at the beginning of 2019, private employers will be required to provide expatriate employees with health insurance, to be funded initially through increased fees for work permit applications and renewals. Foreign visitors to the kingdom will also be required to have coverage. The reforms could bring as many as 300,000 new customers – equivalent to nearly one-fifth of the national population – into the kingdom’s health insurance market, according to Nooruddin.


Bahrain is home to two locally incorporated reinsurance firms, Arab Insurance Group and Trust Re, and two local re-takaful firms, ACR Retakaful and Hannover Retakaful, as well as three branches of foreign reinsurance companies. The value of reinsurance premium taken by firms operating in the country stood at some BD379m ($1bn) in 2016, including BD318m ($842.6m) of conventional reinsurance and BD60.7m ($160.8m) of re-takaful premium. The total figure was down from BD397.4m ($1.1bn) one year earlier.

Retention ratios for local insurance firms vary strongly by segment. Unsurprisingly, smaller risks are largely retained. As of September 2017 the retention rate stood at 96.1% for motor insurance, 89.7% for long-term life insurance and 54.4% for the medical segment, while larger industrial risks tend to be reinsured. The retention rate for engineering insurance, for example, stood at 19.3%, while marine and aviation insurance stood at 25.5% and fire, property and liability stood at 28.9%, according to figures from the CBB. Nooruddin told OBG that the BIA was pushing for higher retention rates, for example through risk pooling initiatives by major local companies — something that is already starting to happen with the support of the CBB.

Distribution Channels

Most insurance sales take place through traditional channels such as agencies and brokers, of which there are 32. Nooruddin told OBG that bancassurance was underdeveloped, describing it as the distribution channel in need of the most work. “Banks are currently mostly interested in motor insurance, whereas life and savings are more appropriate products for the channel,” he said. He added that, by contrast, online sales were showing signs of taking off, noting the arrival of aggregators in the country. Bridge Insurance and Reinsurance Brokers intends to launch the kingdom’s first online insurance comparison site, having received a licence to operate in Bahrain in May 2018. Other recent innovative distribution initiatives include an agreement by Solidarity Bahrain in August 2018, with payment firm Sadad allowing customers to renew their insurance contracts through the latter’s online portal and network of more than 750 electronic self-service kiosks.

Regulatory Environment

In addition to regulatory changes such as the new standard car insurance contracts, the CBB is also in the process of introducing minimum training and qualification requirements for insurance CEOs and other heads of functions. “The new requirements will help to raise the bar in the sector,” said Al Baker, noting that similar regulations had been implemented in other industries, such as banking.


Total insurance industry investments were worth BD992.3m ($2.6bn) in 2016, according to latest CBB data, up 8% on 2015. Non-government fixed income securities accounted for the largest share of investments, on BD557.7m ($1.48bn); followed by bank deposits, BD119.6m ($316.9m); and government debt securities, BD127.2m ($337m). Investment returns rose to BD49.9m ($132.2m) in 2016, from BD29.5m ($78.2m) in 2015.

However, Nooruddin told OBG that the current environment presents challenges for sector investors. This is largely due to low rates of return, though he added that some companies have been doing well by investing in higher-risk assets.


There were eight locally incorporated takaful firms operating in the kingdom as of the end of 2016, including two re-takaful firms. The largest Islamic insurer by gross premium in 2016 was TI, with BD19.7m ($52.2m); followed by Solidarity General, which has since merged with Al Ahlia to become Solidarity Bahrain, with BD15.8m ($41.9m); and T’azur, with BD14.4m ($38.2m). Total gross premium in the takaful segment for the year stood at BD63.9m ($169.3m). In the first nine months of 2017, gross premium stood at BD45.7m ($121m), up 12.3% y-o-y, while net premium rose by 10% to 31.2m ($82.7m), (see Islamic Financial Services chapter).


As in most markets, premium growth will depend in large part on economic growth. However, rising penetration over the long term should also help to boost industry sales. So too should recent merger and acquisition activity, which is leading to the establishment of larger players that are better placed for regional competition. The trend should also bolster profitability through economies of scale as well as greater capacity to retain larger risks domestically.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Bahrain 2019

Insurance chapter from The Report: Bahrain 2019

Articles from this chapter

This chapter includes the following articles.
Cover of The Report: Bahrain 2019

The Report

This article is from the Insurance chapter of The Report: Bahrain 2019. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart