Regulatory changes to boost GCC insurance sector
Dubai, July 7, 2014
Regulatory measures that will enhance the credit profile of the region's insurance market and aid market stability and transparency, are being rolled out in the GCC region, said Moody Investors Service in its special comment published today.
The new special comment, entitled "Evolution of the GCC Insurance Regulatory Landscape is Positive for Credit Quality."
These measures will serve to strengthen several credit factors such as capital, by implementing risk-based capital (RBC) measures to ensure capital is more correlated to the risk undertaken, and asset/liability quality by respectively limiting asset concentration and enhancing valuation measures.
These follow the rapid - but recently slowing - growth rate and surge in the region's insurance sector. The
rating agency says that the insurance industry in the countries comprising the GCC has almost tripled through 2006-13, with insurance premiums increasing to $18.4 billion from $6.4 billion.
Moody's drills down to highlight that several takaful-specific regulations are credit positive as they strengthen policyholder security both directly - by ensuring availability of capital and, in select cases, indirectly - by improving capital access through requiring companies to list on the stock markets.
Increasing mandatory insurance covers, such as health, unemployment, motor third party and liability, have also increased market awareness and represent important credit-positive product evolution for the market's diversification, it added.-TradeArabia News Service