LONDON: Global rating agency AM Best has revised its market segment outlook on the insurance markets of the Gulf Cooperation Council (GCC) to negative from stable.
Key factors that led to the change in outlook include the economic downturn across the region stemming from lower oil prices and COVID-19 containment measures; the expectation of lower insurance demand following a delay in the rollout of mandatory health insurance in Oman and Bahrain; the postponement of EXPO 2020 in Dubai; and the potential delay of government infrastructure projects.
A new Best’s Market Segment Report, titled, “Market Segment Outlook: Gulf Cooperation Council” also cites the adverse impact on capital buffers stemming from financial market volatility and potential decline in real estate valuations, as well as the expectation of increased delays in cash collection related to premium receivables from policyholders, as drivers for the outlook revision.
The report notes these negative factors are partially offset by the introduction of regulatory requirements over the past five years in Saudi Arabia, the United Arab Emirates and Qatar, which have encouraged companies to implement more robust governance and risk management frameworks. Furthermore, AM Best views insurers in the GCC as generally well-capitalised and capable of enduring stress scenarios.