Kuwait’s insurance sector is characterised by the strong presence of several key players and the entry of new competitors in a relatively compact market. While Kuwait’s insurance sector has historically maintained a smaller scale than its GCC counterparts, in recent years a new law and several policy amendments have spurred industry growth. The introduction of compulsory insurance requirements in the auto sector and for foreigners has encouraged the uptake of a variety of insurance products. While there is room for expansion, the potential for advancement in this area lies in enhanced marketing strategies and increased digitalisation.
Regulatory Framework
The first insurance law in Kuwait was passed in 1961, which put the Insurance Department of the Ministry of Commerce and Industry (MoCI) in charge of insurance regulation. There have since been several amendments to the law, including the Civil Code, laid down in Decree Law No.67 of 1980, which introduced the general principles of insurance contracting, and the introduction of minimum capital requirements in 2011. Additionally, in 2006 the Kuwait Insurance Federation (KIF) was established to lobby for member interests and defend their rights.
In 2019 the government of Kuwait replaced the 1961 legislation with a new single regulation on insurance known as Law No. 125 on the Regulation of Insurance. The law manages all domestic and foreign insurers and reinsurers in the country. The Supreme Committee of the Insurance Regulatory Unit (SCIRU) was established within the MoCI as a supervisory and oversight body in 2020. The IRU manages both the implementation of regulations and dispute resolution in the sector. Only insurers licensed by the IRU can operate in Kuwait – whether they are domestic or foreign.
In June 2022 the executive regulations of Law No. 125 of 2019 came into effect, followed in December of that year by the IRU Strategy 2022-27. This new four-year strategy required insurers to renew their licences by September 30, 2022 to continue operating in the sector legally. The new law stipulates that insurance companies can now renew their licences every three years instead of annually.
The regulations set out several conduct of business rules, including obtaining written authorisation from the customer, acting in their best interests and not recommending an insurance company based on the expected commission of product uptake. It also establishes the IRU’s Supreme Committee Disciplinary Board to manage breaches of the insurance law, as well as the Insurance Disputes Arbitration and Settlement Centre to resolve disputes.
There are two types of insurance companies in Kuwait: conventional and takaful (Islamic insurance). Under the new law, companies are allowed to undertake conventional or takaful insurance activities, but not both. Many Islamic insurers are closely connected to Kuwait’s Islamic banks.
Under the new regulations, both national and foreign insurance companies can operate in the country. However, the executive regulations state that foreign companies must provide advanced insurance products and services that are not provided by the existing insurance companies, or existing coverage needed by the insurance market in Kuwait. This means that Kuwait’s insurance sector is largely dominated by national companies.
Insurance Companies
As of end-2023 there were 22 Kuwaiti and 12 non-Kuwaiti insurance and reinsurance companies operating in the country. However, the market is dominated by five insurance firms, which contribute more than 80% of the total written insurance premium. Gulf Insurance Group (GIG) is Kuwait’s largest insurance company, also providing takaful options through Gulf Takaful, established in 2020. In 2020 GIG had a market share of about 58%, followed by Al Ahleia, with 13%. Bahrain Kuwait Insurance Company held 11% and Kuwait Reinsurance Company (Kuwait Re) had 7%. The Kuwait Insurance Company (KIC) accounted for 5%, followed by Warba Insurance & Reinsurance, with 4%, and First Takaful and Wethaq Takaful each with 1%, according to Dubai-based SHMA Consulting.
In 2023 there were eight insurance companies listed on Boursa Kuwait, the Kuwaiti stock exchange. These include KIC, GIG, Al Ahleia, Warba Insurance & Reinsurance, Kuwait Re, First Takaful, Wethaq Takaful and Bahrain Kuwait Insurance Company. Of those listed, GIG, Al Ahleia and Kuwait Re retain the highest market capitalisation, with KD517.9m ($1.7bn), KD128.6m ($418.4m) and KD98.42m ($320.2m), respectively, as of end-2023.
Performance
In 2022 the insurance market in Kuwait was valued at over $2bn and is expected to achieve a compound annual growth rate (CAGR) of more than 5% between 2023 and 2027, according to UK-based industry intelligence firm Global Data. Life insurance dominated the sector in 2022 with greater interest also seen in health and motor insurance, largely thanks to new government policies and greater public awareness of products.
Insurance companies in the country had longawaited comprehensive legislation to improve operational activities and spur sector growth. Although the industry is ranked 74th globally, it is addressing recent challenges with optimism. The sector has a low density of approximately 1.3%, which is expected to rise with the progressively favourable insurance business environment. While historical barriers like limited public awareness, religious and cultural reservations, high public sector employment rates, and free health service enrolment for Kuwaiti nationals have impeded growth, the industry anticipates positive changes and increased opportunities.
As Kuwait looks to diversify its economy in line with New Kuwait 2035, the national long-term socio-economic plan, and beyond oil and gas, the insurance industry is expected to play a major role in the country’s financial sector. Following the introduction of the new law, the government launched several compulsory insurance measures to increase the uptake of insurance products.
In 2019 it became obligatory for visitors to purchase travel health insurance as the government restricted public sector medical care for visitors to emergencies only. In addition, in April 2022 the government proposed compulsory health insurance requirements for obtaining a commercial visit visa. If approved, business travellers will have to pay KD20 ($65) regardless of the length of time they stay in the country. Furthermore, the government has made it compulsory for expatriates over 60 years of age to obtain health insurance.
In addition to new insurance policies, between 2021 and 2026 the Kuwait population is expected to grow at a CAGR of 1.7%, reaching approximately 5.8m, which will accelerate insurance uptake. In FY2021/22 the Kuwaiti government approved some $65bn worth of new projects, 5% of which are public-private partnerships (PPPs). It is anticipated that the development of new infrastructure will increase the number of insurable assets.
The new insurance law sets out several capital requirements aimed at formalising the sector. For companies providing life insurance or general property and liability insurance, the minimum regulatory capital is KD5m ($16.3m), while for composite insurers it stands at KD10m ($32.6m) and for reinsurers it is KD15m ($48.8m). As of end-December 2023 there were also minimum capital requirements for insurance and reinsurance brokers: KD100,000 ($325,400) for general insurance brokerage companies, KD200,000 ($650,800) for reinsurance brokerage companies, and KD300,000 ($976,100) for insurance and reinsurance brokerage companies.
Following the introduction of the law, Kuwait’s insurance market has already seen significant growth. Data from the KIF suggests that the total premium from insurers rose by 14.6% from 2021 to KD629.9m ($2.1bn) in 2022, consisting of KD566.6m ($1.8bn) for Kuwait-incorporated insurers and KD63.3m ($206m) for foreign insurers. Meanwhile, the IRU announced profit of more than KD7.3m ($23.8m) in FY 2022/23. This marks an increase in net assets of over 70% from the previous fiscal year. The IRU achieved more than KD16m ($52.1m) in net revenue from 2020 to 2023, contributing KD11m ($36.8m) to the government budget.
In the first nine months of 2023, KIC reported KD10.7m ($34.8m) in profit, with gross written premium (GWP) reaching an estimated KD42.4m ($138m). This is a 6.8% increase from the KD39.7m ($123.3m) recorded in the same period in 2022.
Life
In 2022 life insurance dominated the Kuwaiti insurance market, with the personal accident and health insurance segments contributing the highest level of direct written premium. Overall sector growth was supported by economic development, public and private investment in infrastructure, and advances in the labour market.
The uptake of life insurance is set to rise significantly in the coming years due to a growing population and an increase in public awareness across the GCC region following the Covid-19 pandemic. Life insurance GWP across the GCC is expected to climb at a CAGR of 3.8%, from $3.8bn in 2021 to $4.6bn in 2026, according to a 2022 assessment by Dubaibased investment bank Alpen Capital.
Auto
Since the introduction of the new insurance law, the adoption of motor insurance has risen substantially, with motor insurance contributing 40% of direct written premium in the insurance sector in 2022. To spur an increase in insurance penetration, in 2023 the SCIRU proposed an increase to motor insurance premium on private vehicles, stipulating that premium must be paid using electronic or cashless mechanisms. As of end-2023, this measure is still pending approval from the Ministry of Interior.
Meanwhile, in early 2023 the government drafted a contract aimed at protecting rental car customers. Under the new regulations, rental companies are prohibited from collecting money from customers for damages to rental vehicles.
Health
Health insurance has become increasingly popular in Kuwait due to a recent change in government policy making its uptake compulsory for some expatriates and visitors. In 2021 the IRU issued an approved list of insurers for expatriate medical and motor insurance. The list is regularly updated.
In 2014 the government established the Health Assurance Hospitals Company (Dhaman), a PPP collaboration between the Kuwait Investment Authority sovereign wealth fund and the Public Institution for Social Security. The scheme, which aligns with the New Kuwait 2035 strategic vision, will provide public hospitals and health centres, and compulsory health insurance for both expatriates and employees working in the private sector.
Dhaman has announced a hike in the annual health insurance premium for expatriates, rising from KD130 ($423) in 2023 to KD150 within two years (see Health chapter). The premium will progressively increase every two years, reaching KD190 ($618) by 2033, following several years of consistent premium costs. Adjustments to the fees may occur in the event that inflation exceeds 6%. Simultaneously, health centre consultation fees are projected to shift from KD2.5 ($8.13) to KD3.5 ($11.39) by 2033, while emergency fees are expected to climb from KD4 ($13.01) to KD5 ($16.27).
Following the introduction of the 2019 insurance law, the government made it compulsory for all expatriates over the age of 60 to purchase private health insurance. About two-thirds of the population are expatriate workers, demonstrating the strong contribution of non-Kuwaitis to the insurance sector. The FY 2023/24 budget also includes KD181m ($588.9m) for new segments covered by the revised health insurance law for retirees.
The GWP from health insurance was expected to reach $52.8m in 2023, with per capita spending amounting to $12.24, according to a projection from German data platform Statista. Between 2023 and 2028 it is anticipated that the CAGR of GWP will be 3.7%, reaching $63.3m by 2028.
Takaful
Takaful insurance is based on sharia – or Islamic religious law – and covers several segments, such as health, life and general insurance. It is popular among Muslims who want to guarantee their insurance adheres to religious norms. A number of takaful insurance companies operate in Kuwait, including GIG’s Gulf Takaful, Kuwait International Bank’s KIB Takaful, Boubyan Bank’s Boubyan Takaful and Kuwait Finance House’s KFH Takaful. Local takaful companies include Wethaq Takaful, Islamic Takaful, Kuwait International Takaful, Al Khaleej Takaful and National Takaful.
In 2022 the Global Finance Group awarded KFH the title of World’s Best Islamic Financial Institution at the annual meeting between the IMF and World Bank Group. KFH was also named the Best Islamic Financial Institution in the Middle East and the World’s Best Islamic Takaful, while Global Finance magazine awarded it the title of Safest Islamic Bank in Kuwait. This recognition reflects the company’s success in providing sharia-compliant products and undergoing a digital transformation.
Micro-Insurance
Micro-insurance schemes provide coverage to low-income households and individuals. They are typically aimed at lower-valued assets and compensation for illness, injury and death. In 2009 Warba Insurance & Reinsurance launched a micro-insurance policy, which includes accident and disability insurance, as well as repatriation benefits to low-income Kuwaiti nationals and expatriates.
There is significant potential for expansion of the country’s micro-insurance offerings, particularly when it comes to raising awareness within the low-income worker population. Approximately 62% of Kuwait’s migrant workers earn below KD125 ($406.70) monthly, while 33% earn between KD325 ($1057) and KD400 ($1301) monthly, according to official estimates. Micro-insurance has grown increasingly popular in low-income countries throughout Asia, Africa and Latin America, with 223m people covered by a micro-insurance product in 34 countries across these regions in 2021.
Awareness
Kuwait’s insurance sector has been working to increase public awareness about their products to encourage greater uptake. This is being supported by government policies that introduce mandatory insurance across different sectors. The KIF hopes to increase the insurance industry’s contribution to the national economy. As of end-December 2023 it contributed less than 2% of Kuwait’s GDP. In April 2022 the federation disclosed that it had organised 64 training programmes, which were attended by over 1000 insurance sector employees. It is also working in collaboration with the Public Authority for Manpower to encourage youth to pursue careers in the insurance sector, and with universities to develop programmes in insurance. The digitalisation of services has supported the KIF in boosting awareness – demonstrated by over 1m visits to its website – as it encourages more players in the insurance sector to provide digital services.
Digitalisation
Sector digitalisation initiatives are helping insurers transform the value chain and remain competitive, according to Alpen Capital. In 2018 the Central Bank of Kuwait established a $200m technology investment fund. It has also pushed advancements in digital banking services, supporting the digitalisation of the insurance sector.
Mohammad Al Otaibi, the head of the IRU, said that the unit is carrying out initiatives to support digital transformation efforts as part of its strategic plan for the 2023-27 period during the annual seminar for the MENA region in October 2023, which was jointly organised by Morocco’s Supervisory Authority of Insurance and Social Welfare, and Oman’s Capital Market Authority. In line with this plan, Kuwait became the first MENA country to approve the development of central insurance repositories, the activity of which is overseen by the country’s Insurance Regulatory Unit.
Insurance technology (insurtech), which involves the use of technological innovations for cost savings and efficiency in the insurance industry, is gaining traction. Dubai-based insurtech firm XA Group partnered with five regional insurance companies – Aman Insurance, Noor Takaful, Oriental Insurance in Dubai, and Al Wathba Insurance and National Takaful (Watania) in Abu Dhabi – to implement its Addenda blockchain platform. This initiative is set to expedite the digitalisation of their products and processes. The impetus for technological innovation was heightened by the onset of the Covid-19 pandemic. As of 2020 approximately 15% of Kuwaitis had adopted some form of financial technology, indicating significant potential for further advancements.
Reinsurance
The prominence of reinsurance companies in the GCC has increased from an average of 27.5% in 2018 to 33.6% in 2020, particularly evident in Bahrain and the UAE. This reflects the positive outlook forecast for 2024’s global reinsurance business, with a CAGR of 3% expected between 2019 and 2028, according to Indian market research firm Mordor Intelligence. In 2022 Kuwait Re recorded premium earnings of KD71m ($231m), up from KD67.7m ($220.3m) in 2021, resulting in a profit of nearly KD8m ($26m) compared to just over KD6.3m ($20.5m) the previous year. The annual growth trend in Kuwait Re’s profit continues, with profits exceeding KD7.3m ($23.9m) in the first nine months of 2023, compared to almost KD5.9m ($19.2m) in 2022.
Outlook
Kuwait’s insurance sector is expanding at an accelerated pace after the enactment of a new insurance law in 2019, backed by supportive government policies. The implementation of mandatory insurance in various areas is driving greater uptake of diverse insurance products, a trajectory anticipated to persist alongside population growth. The planned increase in health insurance premium and services is set to boost sector growth, with a similar trend expected in other segments, including motor insurance, in the decade leading up to 2033.
As Kuwait endeavours to diversify its economy beyond hydrocarbons, the insurance sector is poised to become a key player in the financial industry. The integration of insurtech will facilitate growth and enhance accessibility to insurance products for customers. Meanwhile, collaboration between the KIF, insurance companies and educational institutions will likely encourage more young professionals to take up work in the sector, further supported by new educational programmes and training schemes.
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