Bahrain has maintained its position as a key insurance hub and continues to post growth in its insurance market despite a prolonged period of political turbulence, said a new report.

Prior to the social unrest, Bahrain’s insurance sector had enjoyed strong growth, explained the report titled “Political Uncertainties Overshadow Bahrain’s Regional Hub Status” from A.M. Best Co, a leading provider of data services for the insurance industry.

In 2008, total gross premiums written (GPW) had climbed by 33.6 per cent, surpassing a 25 per cent increase a year earlier. However, in 2011, total insurance premiums rose by a mere 2.4 per cent. Yet despite the political pressures, the insurance sector has shown resilience with greater demand for insurance expected to be reported for 2012, and the market being well-positioned for further growth in 2013.

Mahesh Mistry, director, analytics, said: “Of the six GCC countries, Bahrain has the highest insurance penetration, with total premiums as a percentage of gross domestic product (GDP) reaching 2.2 per cent in 2011. This reflects the higher awareness of the benefits of insurance.”

However, when measured by total GPW, Bahrain has the smallest insurance market in the GCC with premiums of BD215 million ($572 million) in 2011, reflecting the country’s low population. Furthermore, competition from other regional hubs such as the Dubai International Financial Centre (DIFC) and Qatar Financial Centre (QFC) has intensified.

Nevertheless, Bahrain’s robust regulation has enabled the country to maintain its financial hub status, and despite its small size, is the chosen domicile for several regional and international reinsurance and Retakaful companies.

Yvette Essen, director, industry research - Europe and emerging markets, and report author, said: “Bahrain is the least oil-dependent country of those in the GCC. Given that Bahrain does not have the same scale of natural resources as its neighbours, its development of a financial services sector has always been imperative.

“For many years, Bahrain was considered the Gulf’s financial centre, offering expertise and experience. The Central Bank of Bahrain is one of the most highly regarded regulators in the Middle East, adopting a risk-based capital approach,” Essen added. – TradeArabia News Service