Auto Insurance in Qatar
El Tayeb El Mami 201405854
Mohamed Khalil 201402796
Insurance and Risk Management
Dr. Manel Ben Akal
Types of Auto insurance coverages
Auto Insurance in Qatar
How Insurance Companies Calculate Profits
Qatar Insurance Company
Doha Insurance Group
Auto insurance is the insurance we buy for cars, motorcycles, trucks and other road vehicles. Its main objective is to offer financial protection from damages whether they were physical damages or bodily injury resulting from road traffic accidents, also against liabilities that might rise from incidents in a vehicle. Auto insurance may also provide financial protection against robbery of your vehicle, and against damage to the vehicle that happened from incidents besides traffic accidents, incidents such as natural disasters, and damage obtained by crashing with a fixed object. The exact terms of Auto insurance differ with legal regulations from region to region.

Types of Auto insurance coverages
1. Liability Insurance
Liability insurance covers you in events where you are in a car accident and it appears the accident is your fault. Liability insurance will pay the cost of fixing any possessions damaged by the accident, and the medical fees resulting from the injuries. Most countries have a minimum condition for liability insurance coverage that drivers are required to have.
2. Collision Coverage
If there is a car accident, collision coverage will cover the repairs to your car. If the car can’t be fixed or the cost to repair, it is more than the car’s actual value then collision coverage will compensate you with the value of your car.

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3. Comprehensive Coverage
Comprehensive Coverage covers things that might happen to your vehicle from events that are not related to traffic accidents, events such as weather damage, hitting an animal, theft of your car. These things all fall under comprehensive coverage.

4. Personal Injury Protection
Personal Injury Protection is the insurance that covers the costs related to injuries from traffic accidents. With Personal Injury Protection your medical fees and the medical fees of your passengers will be paid, it does not matter who’s at fault in the accident the PIP will cover the medical fees. Personal Injury Protection (PIP) is something most drivers should get but it’s not available in all countries.

Auto Insurance in Qatar
Auto insurance first appeared in the United Arab Emirates in the 1960s then it started to spread in the middle east reaching Qatar. In Qatar the are Mainly two types of car insurance one of them is mandatory which is the Third-Party Liability (TPL) insurance, and the second one is Comprehensive car insurance.

Third Party Liability:
This is the minimum insurance required to drive your car on public roads. Without TPL (which is part of the comprehensive insurance) cover, you are by law not allowed to drive your car on public roads. TPL insurance covers injuries or damage that you may cause upon others in case of an accident but does not cover any damage to your car.

Comprehensive Car insurance – full Cover:
Comprehensive car insurance is the best option for you when you want your car to be fully covered. This insurance covers for all damages, even when you are at fault or when an accident happens with only you are being involved.

How Insurance Companies Calculate Profits:
Generally, insurance companies will use the combined ratio to measure their profitability, and this ratio is a combination of two other ratios which are the loss ratio and the expense ratio.

Combined ratio:
Combined ratio, which is also known as “the combined ratio after policyholder dividends ratio,” is a ratio that measures the profitability of insurance companies to scale how well is its performance in its everyday operations. The combined ratio can be calculated by dividing the total of incurred losses and expenses the earned premiums.

Calculated as:

Loss Ratio
The loss ratio is the ratio of incurred losses and loss adjustment expenses to premiums earned

Expense Ratio
expense ratio, which is also called the management expense ratio (MER), helps the company measures how much of a fund’s assets are used for administrative and other operating expenses. The expense ratio is equal to the company’s underwriting expenses divided by written premiums.

Qatar Insurance Company
Qatar Insurance Company was founded by the Amiri decree in 1964. The government was sure that the state required a strong insurance industry to protect the growth in business and personal assets. Qatar Insurance Company and its subsidiaries, provided many types of insurance such as real estate insurance, reinsurance, and many other types of insurance. It functions over 6 separate units: Property and Casualty Insurance, Marine & Aviation Insurance, Real Estate, Health and Life Insurance, Investments, and Advisory. Qatar Insurance company offers a many types of personal insurance products such as home insurance, travel insurance, and automobile insurance.

Qatar Insurance Company (QIC) is currently the biggest and most profitable insurance company in Qatar. Furthermore, according to Qatar Stock Exchange Qatar Insurance Net earned premiums for 2016 were 8,359,887,000 and for 2017 it increased even more reaching 8,928,622,000 QR.

QIC reported the following information for 2016 and 2017.

Figures, in USD million 2017 2016
Gross written premiums 3,203 2,720
Net written premiums 2,624 2,357
Net underwriting result* 32 232
Net investment result 248 223
Consolidated net profit 115 284
Return on Equity 5.1% 14.7%
Non-life combined ratio 105.8% 98%
Earnings per Share (in USD); 2016 restated 0.35 1.02
Total assets 9,540 7,889
Market capitalization 4,076 5,618
Shareholders’ equity 2,203 2,263
The company’s combined ratio for the first half of 2018 was 100.5% and in 2017 it was 99% which was slightly higher than their 2016 combined ratio that reached 98%. Even though Qatar Insurance Company had a combined value that surpassed 100% in the first half of 2018 that does not mean the company is not profitable as the combined ratio does not include profits from investments, also the combined ratio is only for the first half of the year and it might change by the end of the year. Generally speaking in terms of claims and premiums the company might not be that profitable but if we included the investments profits we will see that the insurance companies are actually very profitable.

Doha Insurance Group
Doha Insurance Group is a Qatari insurance company that was created in 1999 by the Amiri Decree to help Qatar keep up with the rising demand in insurance products. The company is a listed company in Qatar stock exchange and have one subsidiary named Doha Takaful which offers insurance activities with what follows the Islamic sharia principles. Doha insurance company is the second biggest company in Qatar in terms of Auto insurance right after Qatar Insurance Company. In the last year the company reported a net earned premiums of 199,521,515 QR and Net underwritings of 71,364,631 QR the company’s 2017 net earned premiums were higher than its net earned premiums in 2016 which were 157,614,363 QR but its net underwritings were higher in 2016 at a value of 86,510,298 QR. Looking at the company’s finances for the last 2 years and the first half of the current year we can see that Doha Insurance Group profit have been increasing with every year, even though the company’s ratios were not available on their website or the financial statements by including the profits from investments we believe the company is making profits. Furthermore, looking at Qatar Insurance Company finances which proves that it also was profitable in the past few years we can conclude that the Auto insurance industry in Qatar have been growing bigger and bigger, but it’s not thanks to the premiums but the profits from investments.

To sum up, the Auto Insurance in Qatar have developed a lot since it was first made but it still has a way to go there are still some type of insurance coverages that are not available in Qatar such as the Personal Injury Protection (PIP) insurance. Moreover, there are many insurance companies in Qatar now and looking at Qatar Insurance Company and Doha Insurance Group which are two of the biggest insurance companies in Qatar and among the first ones to be created and made into public companies in the state of Qatar we can see that the insurance companies in Qatar are profitable, a lot profitable as the combined ratio for Qatar insurance company for the past 2 years was always under 100%. In 2017 their combined ratio was 99% and in 2016 it was 98% which is not that far from the 2017 ratio, with this we can determine that the company is making underwriting profits beside the investment profits. As for Doha Insurance Group we can determine that its making profits from its investments activities but we couldn’t determine its profits from underwritings. Finally, the combined ratio which insurance companies use to calculate their profitability is made up of two ratios the loss ratio and expenses ratio that we have mentioned earlier.