Within the Middle East and Africa region, Bahrain stands out for the regulatory framework and country risk factor as the strong country structure contributes to the kingdom's Insurance Business Environment Rating (IBER). Bahrain's IBER is 52.7. Relative to other countries in the region, “it is a moderately attractive insurance market for foreign insurers,” the latest report of Research and Markets on Bahrain Insurance Report said. Government policies are likely to remain constant over the long-term, and the GDP per capita is score. The IBER is significantly held back by the underdevelopment of the life and non-life segments and the financial infrastructure. Although openness to new entrants is low, 5 out of 10, it is higher than others in this region. Over the forecast period, we anticipate that non-life premiums will grow by 15 percent annually in local currency and US dollar terms. Life premiums are expected to increase by 13 percent annually in local currency and US dollar terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in nominal GDP from around $16.39 billion to $22.92 billion and an expected increase in non-life penetration from 1.78 percent of GDP to 2.5 percent. The key drivers of growth in the life segment are the envisaged rise in life density from $92.46 per capita in 2007 to $150 per capita in 2012, the report said. The non-life market is small, but not closed to foreigners, it added. “Simple arithmetic suggests that at least some of the four identifiable cross-border groups have significant market shares. We doubt that many other cross-border firms will attempt to enter the tiny Bahrain life market. Cross-border distribution of life products is harder than cross-border distribution of non-life products. The identities of the various firms that hold licenses for offshore business in Bahrain indicate that very few firms, if any, see the country as a suitable base for offshore life business. Indeed, the limited absolute size of the market opportunity means that it is unlikely that additional local firms will enter the segment,” it said. The report pointed out that the kingdom has a “strong country risk factor, supported by a very low financial risk,” adding that the economy is more diversified than Gulf peers. Bahrain is a regional financial hub, with a well-developed banking sector. Inflation is low and the pegged currency eliminates exchange-rate risk, it noted. However, planned labor market reforms will increase the visa fee employers need to pay for expatriate workers, and will introduce a new tax on expatriate workers (to replace quotas). “Tax concerns weaken the IBER for Bahrain,” it said. Bahrain's insurance industry consists of conventional and Islamic (Takaful) companies which serve both the onshore and offshore insurance markets, primarily Saudi Arabia. The conventional onshore segment consists of 10 locally-incorporated firms, 8 full branches and 6 representative offices of foreign insurance companies. The industry has been growing steadily in recent years, mirroring the growth of Bahrain's financial sector. __
