The insurance sector is considered an important pillar of the Palestinian economy because it plays a significant role in the development of the local economy and strengthens the bonds of economic and social stability and progress. Through the relationship between the insurer and the insured, insurance performs a social role by providing security and is a manifestation of cooperation and solidarity. Additionally, it plays a role in economic life as a means of credit and an effective way to gather the capital necessary for the economy, making it an element of production that leads to revitalizing and supporting the national economy.
In recent years, the insurance sector in Palestine has witnessed noticeable development in terms of doubling the size of the insurance portfolio and the level, nature, and quality of insurance services provided by insurance companies to the public.
The Most Prominent Statistics and Results in the Insurance Market
The Palestinian insurance market achieved insurance premiums worth $395 million in 2023, compared to $396 million in 2022, showing a decrease of less than 1%. Meanwhile, the total compensations paid to beneficiaries of insurance coverage increased from $255.8 million in 2022 to $257.7 million in 2023, reflecting a growth rate of 1%.
Insurance companies achieved net profits of $7.15 million in 2023, compared to $21.7 million in 2022, marking a 67% decrease in net profits from 2022. This decline is significantly attributed to the transition of insurance companies to applying the International Financial Reporting Standard No. 17 (IFRS-17) on the 2023 financial statements, the decrease in the market value of financial investments, and the repercussions of the war on Gaza and the continuous Israeli aggression on the Palestinian people.
The insurance penetration rate, defined as the ratio of total insurance premiums to the gross domestic product (GDP) at current prices, reached approximately 2.27% by the end of 2023, compared to around 2.07% at the end of 2022. Moreover, insurance density, or the per capita share of the total insurance portfolio, decreased to about $71.22 at the end of 2023, compared to $73.08 in 2022.
Year | Total Premiums (Million US Dollars) | Population (Million) | Gross Domestic Product (Billion US Dollars) | Per Capita Expenditure on Insurance (in US Dollars) | Insurance Ratio in GDP (%) |
2019 | 302,509,068 | 4.7 | 17.134 | 60 | 1.77 |
2020 | 303,244,103 | 4.8 | 15.561 | 58.72 | 1.95 |
2021 | 363,019,897 | 5.2 | 18.036 | 64.55 | 1.89 |
2022 | 396,012,710 | 5.4 | 19.112 | 73.08 | 2.07 |
2023 | 395,179,493 | 5.5 | 17.396* | 71.22 | 2.27 |
- According to Estimated Data Issued by the Palestinian Central Bureau of Statistics.
Categories and Branches | 2021 | 2022 | Rate of Development (%) 2021/2022 | 2023 | Rate of Development (%) 2022/2023 |
Vehicle Insurance | 250,481,204 | 274,437,047 | 9.6 | 267,662,970 | -2 |
Labor Insurance | 27,630,301 | 30,231,348 | 9.4 | 29,906,210 | -1 |
Health Insurance | 38,009,154 | 40,806,747 | 7.4 | 43,474,831 | 7 |
Civil Liability Insurance | 4,980,362 | 5,170,864 | 3.8 | 5,687,457 | 10 |
Other Insurance | 7,040,572 | 8,452,926 | 20.1 | 8,342,054 | -1 |
Fire Insurance | 18,535,124 | 18,579,776 | 0.2 | 20,684,044 | 11 |
Marine Insurance | 1,858,807 | 1,938,222 | 4.3 | 1,955,017 | 1 |
Engineering Insurance | 7,377,363 | 7,764,396 | 5.2 | 8,390,394 | 8 |
Life Insurance | 7,107,010 | 8,631,384 | 21.4 | 8,468,182 | -2 |
Agricultural Insurance | 0 | 0 | 0 | 608,335 | 1 |
Total Premiums | 363,019,897 | 396,012,710 | 9.1 | 395,179,493 | 0 |
Years | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Premiums | 255,421,729 | 279,370,598 | 302,509,068 | 303,244,103 | 363,019,897 | 396,012,710 | 395,179,493 |
Compensation Paid | 144,320,228 | 166,307,996 | 182,660,629 | 179,630,303 | 227,977,187 | 255,872,881 | 257,690,889 |
Losses and Damages Sustained or Expected by the Insurance Sector Due to the War on Gaza:
The Palestinian insurance sector, like other economic sectors, faces numerous challenges due to the ongoing Israeli aggression on Gaza, the complete disruption of economic life in Gaza, and the significant impact on economic activity in the West Bank and Jerusalem due to repeated incursions into the West Bank, the policy of closures between West Bank governorates, the dismissal of over 90% of Palestinian workers inside the 1948 territories and settlements, and the prevention of Palestinians from the 1948 territories from visiting and shopping in West Bank cities. This is in addition to the Israeli occupation’s continuous deduction of parts of tax revenues entitlements (Makasa/clearance) in recent periods which has exceeded 6 billion shekels, the latest of which included the portion related to the salaries of Gaza Strip employees. This has limited the government’s ability to fulfill its financial obligations to the public and private sectors. This situation is further exacerbated by the sharp decline in external aid, leading to economic contraction. The GDP in the West Bank fell by 19% in the fourth quarter of 2023 compared to the same quarter in 2022. The insurance sector was not spared from these impacts, as total vehicle insurance premiums declined by approximately 21% in the fourth quarter of 2023 compared to the same quarter in 2022. This had the most significant impact on the overall insurance portfolio for 2023.
The aforementioned factors also led to an increase in the value of returned cheques, with a notable rise in December 2023 to $276.4 million, up from $97.7 million in the previous September. This significantly affects the liquidity of insurance companies due to the deferred payment of insurance premiums.
The war also affected navigation in the Red Sea, leading to a sharp increase in the prices of marine cargo insurance contracts due to the imposition of fees to cover risks associated with conflicts and the significant increase in shipping costs resulting from taking longer alternative routes.
