Qatar’s mandatory medical insurance to generate up to QR1.5 billion in additional GWP

March 4, 2022

Qatar’s mandatory medical insurance scheme could generate up to QR1.5 billion in additional gross written premiums (GWP) in the coming years, according to S&P Global Ratings.
Expected to take effect in May 2022, the mandatory insurance law requires all foreign visitors, residents, and workers in the country to hold medical insurance for the entire duration of their stay, unless they are exempt.
“We estimate that the scheme could generate QR1 billion-QR1.5 billion in additional GWP in the coming years. We have not incorporated this in our growth forecast for 2022, since no details about the potential volume have been disclosed,” the S&P report said.
In the meantime, the report anticipated that higher public expenditure to diversify the Qatari economy and further preparation for the 2022 FIFA World Cup will contribute to GWP growth in 2022.
In the GCC, the report said, the insurers’ credit quality was largely stable.
“Positive rating actions and outlook changes outpaced downgrades in 2021, spurred by a build-up in earnings and capital. We anticipate this trend will slow in 2022, given some earnings headwinds,” the report said.
“Overall, we expect our ratings to remain broadly stable, but note that some negative rating actions could follow if we observe unexpected severe investment or underwriting losses, or company-specific governance/internal control failures.”
The report said GCC insurers would remain profitable in 2022, but ongoing intense competition, particularly in motor lines, will likely constrain technical results.
Earnings in 2021 were supported by well performing capital markets, resulting in stronger investment returns, S&P noted. Increased capital market volatility in 2022 could offset higher interest rates and mean lower returns, it added.
“We project profitability will only improve in Saudi Arabia this year, where pressure on underwriting is likely to ease. However, we note that this comes from a low base and project the sector’s profitability will remain relatively weak.
Improving economic sentiment and higher oil and gas prices — on an S&P assumption that Brent oil price will average at $85 for the remainder of 2022 — should lead to accelerated economic growth in the region, the report said.
“We expect that insurers will likely benefit from ongoing infrastructure spending, new mandatory coverage, and potentially higher insurance demand. That said, an uncontrolled resurgence of COVID-19 cases limiting mobility could slow the global and regional economic recovery.”

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