Insurance Domain – KSA SWOT and PESTLE Analysis

Strength

1. Good linkages with many nations gives scope for trade insurance business: Within the Gulf, there is tremendous potential for cooperation in trade, investment, energy, manpower, etc. amongst the different nations nestled in it. Economic linkages of GCC and many other primary countries have increased steadily due to growth in oil imports. For instance with India the GCC has had strong historical ties. Besides, the geographical proximity, growing trade and investment opportunities, and presence of 3.3 million Indian workers in the region, are of vital interest to India. Due to a high potential market, GCC states, also are a key market to major foreign companies which treat the Middle East as one of the major emerging markets for their business.

2. Strategic geographic location: Oman enjoys an advantageous geographic location, by virtue of which it controls the most imperative marine trade, the course between the Arabian Gulf and the Indian Ocean. Oman's ocean drift extends for 1700 kilometers and the Sultanate is viewed as the door to the Arabian Gulf. Its area likewise makes Oman, the gathering spot of the Asian and African mainland. The proximity of Oman to India is a major advantage. The GCC states offer an expansive consumer market obliging around 28 million people with high purchasing power. Also, Oman is nearer to the Iran and Yemen markets which take into account around 82 million purchasers. The Sultanate likewise lies between the business sectors of the Indian sub-landmass and the African continent. This geographic positioning gives it great access to the landlocked Central Asian Republics.

3. Strong Growth in the insurance sector owing to supportive policies: The Sultanate embraced free market, open monetary and healthy competition strategy alongside the existence of regulating rules such as anti-dumping laws and intellectual property protection rules and different laws identified with the business and investment practices. Sultanate of Oman have put in place many policies to advance and empower interests in different monetary segments. Some of the policies which project and empower these nations as an exceedingly potential market are freedom to transfer capital and profit, customs exemption for machines, equipment, and raw materials of industry, Income tax exemption up to ten years for companies, availability of well-planned industrial lands for a nominal rend with reductions for basic services (water - electricity - gas), foreign ownership percentage of 70% directly with the possibility of reaching to 100%, insurance policy program of Omani origin exports against political and commercial dangers.

4. Strong growth prospects: The GCC Insurance sector is anticipated to develop at a CAGR of 10.9% to US$ 44.0 billion till 2021. A growing population, monetary expansion and country specific regulations to fortify the insurance sector are some of the factors that project great opportunities for the future. Amid the forecast period, insurance markets in the UAE and Oman are foreseen to develop at the quickest annualized normal pace of 12.1%, trailed by Saudi Arabia at 10.5%. The non-life insurance coverage advertise is relied upon to develop at a rapid CAGR of 11.7% to US$ 39.8 billion in perspective of the new directions enhancing evaluating of insurance policies, a foreseen restoration in the economy, mandatory covers and rising healthcare costs. Life insurance market is anticipated to develop at a yearly rate of 5.3% driven by rising population and risk awareness.

Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

1. Growing risk of Cyber threats: Insurers in today’s increasingly digital world face major vulnerabilities from internal and external data and security breaches, large-scale denial-of-service-attacks, cyber espionage, intellectual property exposure and reputational damage aside from the traditional form of data breaches. There is a high risk on put sovereign and corporate level ratings as Cyber threats grow. This could lead to significant restrictions on accessing capital. As a result of less evolved technical capabilities, weaker regulatory oversight and, above all, lack of budgetary allocations in light of players’ low profitability, adopting a comprehensive cyber risk management framework remains a steep challenge.

2. Technology disruption in GCC countries: As a result of high digital disruption and upcoming technologies, the customer dynamics have been on a shift in these countries. Customers are shifting to online and mobile channels, expect for a seamless online experience. With traditional operating models unable to meet changing market needs, insurers in the region need to make digital a central component of their business strategy. Reduced costs, to sell and service, increased customer engagement levels, improved persistency and enhanced process efficiency are some of the values that digital can deliver. Middle East insurers have been sluggish to adopt technology except those with strong global roots or financially sound business models are investing steadily in technology driven innovation. . A major share of auto premiums is expected to be generated via technologies like Telematics enable auto insurers to shift to more accurate usage-based insurance. Also life and health insurers break from traditional business models and provide outcome-based customer services in marketing, underwriting, risk management, new product development and claims management through wearable technologies. Technology is also a key enabler to deal with cost pressures. However Middle East has been relatively on a backfoot to these technologies so far, but it is only a matter of time before these changes will completely alter the operating and competitive environment.

3. Data analytics will shape the insurance industry: As mentioned above, customer dynamics are shifting to adoption of digital technology .Insurers have started capturing customer data through social media, call centers and smart devices and it is only a short time before legacy systems and archaic processes will be replaced. Favorable demographic profile, Investment in digital, incoming global insurers and expats are some of the factors which will improve the insurance market and as a result the market will be more data intensive. As a result of this the industry penetration will grow as more and more customers become aware of the risk management tools, the benefits of quality insurance, and ancillary information. Customer centricity being one of the primary focus in this sector, insurers in the GCC will look for analytics solutions to gain competitive advantage in the future. With most global insurers significantly investing in recent years, it is only a matter of time before data analytics gains importance in these markets.

Legal

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Environmental

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