Middle East & Africa
In this chapter of our Annual Insurance Review 2024, we look at the main developments in 2023 and expected issues in 2024 for the Middle East & Africa.
Key developments in 2023
Middle East
Last year's Annual Insurance Review predicted that investments in green technology and sustainable projects would continue to grow in the Middle East in line with the region’s ambitious renewables energy targets.
The legal and regulatory landscape in the Middle East is evolving to support these advancements. The Dubai World Insurance Congress continues to highlight the insurance market's commitment to renewables. Last year, it was noted that insurers and brokers who undercut ESG standards will "face catastrophic consequences". This year, the Congress stated that regulatory "force" will be necessary to spark industry climate action.
The introduction of the Saudi Civil Transactions Law (KSA Civil Code) is a further example of the developing legal landscape in the region, integrating Islamic principles into a more formalized legal framework, in an effort to promote business-friendly legal mechanisms and streamline transactions including the resolution of insurance claims.
Africa
Last year we predicted continued market sophistication in Africa, driven by a growing focus on innovative and technology driven solutions.
We have witnessed the beginnings of a shift towards the implementation of risk-based capital (RBC) regimes across the world's second-fastest-growing region for insurance. South Africa is the forerunner, transitioning to an RBC regime similar to Europe's Solvency II, setting a benchmark for regulatory reform. We anticipate other nations to follow suit. Adopting RBC regimes should bolster resilience in the insurance market, safeguard consumers, and promote financial discipline.
Further signs of growth in Africa's insurance market are evidenced by the strategic expansions of major insurers into the region and Africa Speciality Risks' recent approval for a Lloyd's syndicate launch.
The entry of new international insurers, the sustained investment by existing international insurers, and the developing regulatory environment in the region underscore the growing attractiveness of the African market.
What to look out for in 2024
Middle East
With a forecasted annual growth of 13.43% in the renewable energy market from 2023 to 2028, we expect continued success in the Middle East's transition to sustainable energy sources.
The UAE continues to be a leader in this sphere, with ambitions for clean energy to constitute 50% of its total energy supply and generating over 70 GW of power by 2050, in alignment with its Net Zero by 2050 strategy.
We anticipate further leveraging of the region's substantial solar potential. Solar and wind energy alone are set to double the region's renewable power generation capacity by 2030, while existing projects already underway are expected to increase the region's renewable energy production capacity fivefold by 2030.
According to the International Renewable Energy Agency's Pan Arab Clean Energy initiative, 92% of the renewable energy generation targets set for Middle Eastern countries are expected to be met by 2030.
The drive towards renewable energy in the region continues to necessitate extensive construction projects and the operation of vast energy infrastructure, all of which require investment and insurance solutions.
Africa
We anticipate that innovative and technology driven solutions will continue to drive the expansion of the African insurance sphere.
The African Insurance Organisation's (AIO) focus on digitization, particularly through mobile technology, should continue to enable the delivery of tailored micro-insurance products and expansion of services into rural areas. In Kenya, for instance, one notable product is M-PESA's mobile-based health insurance service called M-TIBA which allows users to save, send, and receive funds specifically for medical treatment, linking them directly to healthcare providers. This service has significantly increased access to health insurance and care in the region, and we expect similar products to continue facilitating the market's expansion.
Further, it is possible that other countries on the continent may follow South Africa's lead with their own implementation of risk-based capital (RBC) regimes. As the continent continues to evolve and adapt, it is expected that the insurance sector will not only expand but also become more robust and integrated into the global financial system.
Written by Tom Scanlon, William Jones & Toby Savage
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