Naqi said new regulations were required to create a favorable investment atmosphere in the insurance sector in the region where the volume of the current insurance market was estimated at about $ 5.1 billion and projected to cross the $ 7 billion mark in 2010.
“The regulations should be candid and transparent in terms of both principles and applications. They should be able to deal with the basic issue of an insurance company’s financial coverage and increase the minimum level of the capital of these companies,” Naqi said.
The GCC official also pointed out that the regulations should be uniform for all the GCC countries.
The official wanted a review of the relations between the companies and their clients so that the policyholders get broader coverage and protection.
The GCC official indicated that the need for a large reinsurance company of local origin has been felt strongly.
Several insurance companies in the region wanted to stop the huge flow of the Gulf money for reinvestment in foreign companies and have submitted a study to the federation on the feasibility of establishing a Gulf company for reinsurance. He estimated the ratio of reinsurance in the region at 52 percent of the all installments, which, he said, is higher than the rate in the current international market rate.
The presence of foreign insurance companies in the local market causes the outflow of the reinsurance installments, he said.
The official attributed the growing demand for reinsurance in the region to fear of political conflicts.
Another factor was the smaller size of the insurance market.
He also noted that the capital of the insurance companies in the region was also low.
However, he said the local companies were many in number and that triggered stiff competition.
The official attributed the slow growth of the insurance sector, particularly with regard to the life insurance, in the Gulf region to people’s religious sentiments and lack of education.
Naqi said the federation is planning to host a conference in Riyadh April next year to discuss all issues pertaining to insurance industry in the region.
