developing the mena insurance sector – econometric and anecdotal indicators rodney lester
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Developing the MENA Insurance Sector – Econometric and Anecdotal Indicators Rodney Lester World Bank Consultant. Source: AXCO. Core economic and structural drivers of penetration – country effects proxies. P&C. Life. GDP/ Capita. GDP/ Capita. Population (trade proxy). Inflation. - PowerPoint PPT PresentationTRANSCRIPT
DEVELOPING THE MENA INSURANCE SECTOR – ECONOMETRIC AND ANECDOTAL INDICATORS
RODNEY LESTER WORLD BANK CONSULTANT
MENA
Sub Sa
haran
Afric
a
Russi
an Em
pire
Latin
Ameri
ca
Centr
al/ So
uth As
ia
East A
sia/ P
acific
North A
sia
Cont.
Europ
e
Anglo
sphere
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
MENA is the smallest consumer of insurance?
Life Pen. %P&C Pen. %Health Pen. %
Source: AXCO
0 10000 20000 30000 40000 50000 60000 70000 80000 900000
0.5
1
1.5
2
2.5
3
3.5
4
Stylized penetration % v. GDP/capita
Life CurveP&C Curve
Core economic and structural drivers of penetration – country effects proxies
P&C Life
GDP/ Capita
Population
Population Density
Inflation
GDP/ Capita
Inflation
Population(trade proxy)
P&C Penetration v. GDP/ Capita and Actual v. Expected after economic and structural factors
Life Penetration v. GDP/ Capita and Actual v. Expected after economic and structural factors
Other highly predictive drivers of penetration
P&C Life
Private credit
Private insurer SOM
Top 20% income share
Sharia role
Private credit
Legal rights
Sharia role
Private insurer SOM
Car fleet
Bond Market
Legal rights
Concentration
Old age dependency
The scale/ competition trade off leads to natural concentrations levels
Source: Thorburn, ‘Insurers: Too Many, Too Few or Just right”
Motor premiums in MENA are less than they should be
Things that can be changed relatively quickly
Issue ResponseMTPL Tie to annual car registration, set up central claims database,
keep politicians out of pricing, use nominal defendant
Efficient industry structure
Set minimum capital, minimum premium retentions, minimum market shares for mandatory lines, privatize government insurers, ensure exit of insolvent insurers
Mandatory insurances
Add mandatory coverages that have social benefit – WCA, general liability, PI, health etc
Sharia law Focus on developing family Takaful
Private credit development
Encourage mortgage and personal loan market development
Bond markets
Encourage development of bond markets and yield curve standard
Consumer protection
Institute basic consumer protection regime – transparency, recourse, education.
MENA’s low insurance penetration represents an enormous opportunity