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Insurance Market/Strategy

Middle East Update: A Growing SME Market for Insurers

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The small to medium enterprises (SME) market is emerging as a sizable and fast-growing segment of the Middle East’s economy.


According to a 2016 study by Bloovo.com, an online staffing and recruitment company specializing in the Middle East, SMEs currently account for 90% of registered companies in the MENA (Middle East and North Africa) region. A 2017 study by MENA Research Partners states that in the GCC region alone (UAE, Kuwait, Qatar, Oman, Bahrain and Saudi Arabia), the SME market is forecast to grow to $920 billion by 2022. Bloovo’s CK growth estimates are similarly lofty: its expectation is that the SMEs in the GCC will expand at an annual rate of almost 2.5% through 2020.

Driving growth in this segment are several short- and long-term trends, which differ by country. Some trends, however, are region-wide: First, more than 40% of the region’s population is under age 25. Second, public sector job creation is plateauing, and SMEs will most likely comprise the next wave of employment opportunities. Third, even though oil’s price per barrel has more than doubled since its 2016 trough, the price slide since its June 2014 peak is increasingly pushing oil-rich countries to support SME establishment and growth so as to achieve more diversified economies.

A positive environment

Dubai seeks to be a primary business hub for SMEs in the Middle East, and so has been nurturing SMEs for nearly two decades. In 2002, the city and emirate’s department of economic development first established the Dubai SME agency as a resource for the sector. More recently – in May 2018 – the agency announced new regulations for incubators and business accelerators in order to promote entrepreneurship.

Dubai isn’t the only emirate looking to improve its SME market. In early June, Abu Dhabi, the capital of the UAE, rolled out a US$13.6 billion economic stimulus plan that includes initiatives to promote public and private sector jobs and growth. Announced in a tweet, the plan’s Abu Dhabi Accelerators and Advanced Industries Council, has been charged specifically with developing ways to attract and support value-added investments and technologies, as well as SMEs. 

For Saudi Arabia, as we mentioned in our last article, SME growth in the private sector is part of its Vision 2030 program. The program goal for SMEs is to raise that sector’s GDP contribution to 35% by facilitating better access to seed funding. In 2017, plans were announced to encourage financial institutions to allocate up to 20% of loans to private sector SMEs (up from 5%), and to increase female workforce participation. In addition, the nation’s implementation of the final phase of the compulsory health insurance in 2017 has substantially increased the size and scope of the country’s health insurance market. All companies with 25 or fewer employees must provide health insurance to Saudi and non-Saudi employees and dependents, including children (sons under age 25 and unmarried daughters).

Egypt is also committed to strengthening its SME market. In 2017, the country revised its Companies Law to include single-person companies, and implemented structural reforms aimed at reducing the time, cost, and procedures of starting a business. Egypt’s president, Abel-Fattah El-Sisi, has been and is a strong proponent of SMEs: in 2016, he launched an initiative to provide US$200 billion in low-interest loans over four years to SMEs, and in May he announced a five-year tax exemption for SMEs that register their businesses.

Group life and health opportunities

Over the past few years, insurers in several of the region’s countries have been moving with increasing speed to offer group life and health products targeted for SME segment companies. SME classification varies from region to region, and in some cases, from country to country. In the Middle East, countries base their definitions on employee size, and the range is wide. Micro companies, which are included in the Middle East’s SME market, can range between 9 and 20 employees. Small can be 10 to 50, and medium can range from 50 to as high as 250 – sufficient critical mass to be viable group life and health customers.

RGA has anticipated the growth of this market segment. Since 2015 we have been working with clients on designing and offering prepackaged health and life products that can be sold over the course of a single customer visit: during that visit, illustrations and rates can be developed and, frequently, the sale executed. Products such as these, which enable speed and simplicity, have been successful both in the Middle East and elsewhere in the world. In 2016 RGA successfully launched its first SME Life product in Saudi, in 2017 launched the Health SME in UAE, and in 2018 a Life SME in Egypt.

The “fourth industrial revolution” – the current digital revolution in information, technology, and innovation that is blurring the lines between the physical, digital and biological spheres – is changing relationships among citizens, countries and their economies all over the world, and the Middle East is no exception.

RGA will continue working with clients to develop and market group life and health products for SMEs throughout the region, helping the countries and their citizens participate.

The Author

  • Tamer Saher
    Director Business Development
    RGA Middle East
  • Dubai
  • Egypt
  • group benefits
  • group health
  • Group Life
  • insurance market
  • insurance medicine
  • medical advances
  • medical underwriting
  • MENA
  • middle market
  • protection gap
  • Saher
  • Saudi
  • small to medium enterprise
  • Tamer Saher
  • UAE
  • underinsured
  • Underwriting