Reinsurance
Product Family

There is clearly immense growth potential for insurance and reinsurance in the Middle East and North Africa (MENA) region given the current level of insurance penetration rates. However, how the industry manages to expand this market without compromising the bottom line has been the focus of much speculation over the years, and this delicate balancing act was the main theme of last month’s MultaQa conference.This has led to a mixture of optimism at the market potential, and some pessimism due to the current market conditions and bleak economic outlook ahead. This was certainly reflected by market sentiment at the conference in Doha, which is in its 10th year, attracting more than 700 delegates from around the world.And no wonder. According to the MENA Insurance Barometer 2016, the region has a $50 billion insurance market against a gross domestic product of $3.4 trillion, leaving sizeable scope for growth in attracting global re/insurers, but equally presenting a sizeable challenge in achieving this growth.The potential has led to some market share grabbing, which is reflected in the level of pricing and terms and conditions offered.Time and again during the conference, discussions turned to the shared responsibility of brokers, cedents and reinsurers to realize sustainable growth by steering the market towards greater underwriting discipline.In order to achieve such underwriting discipline, there should be a strong focus on retention levels and a balance between cedant and reinsurers exposure.While there is no sign that capacity is drying up,  creating challenging market conditions,  market sentiment was focused on the need to think more about the quality and not just the quantity of capacity entering the market. There is a general acceptance that a reduction on overall capacity will sharpen the focus on profitability.The issue with lower profitability in the market is highlighted by players that have already chosen to withdraw from the region’s non-life insurance market.There remains a strong reinsurance purchasing culture among local cedents due to the size of the projects and the growth of new products and specialty classes.With its inextricable links to the energy markets in the region, insurance and reinsurance profitability has also been impacted by shifts in supply and demand for crude oil‑ and this was also a hot topic at MultaQa.Despite some recovery in the price of oil to around the $40 mark it’s still a long way away from a few years back and with no signs of recovery to such levels in the near future.This has led to interesting discussions about the long term implications of the current oil prices, with a shift expected from the heavy dependence on the oil industry towards a more balanced economy. This could lead to development in the services, tourism and financial industries to drive growth, and in the United Arab Emirates, we are already seeing the success of this.Changes in industry also of course present new risks, which in turn require the insurance industry to come up with new solutions to cater for the market requirement. So the impetus is on insurers to bring innovative solutions to the region, and I am sure that will be high up the agenda at future MultaQa conferences.

  • About The Author
  • Senior Executive Officer, Reinsurance, Middle East, AXA XL
Invalid First Name
Invalid Last Name
Country is required
Invalid email
Invalid Captcha
 
Subscribe

More Articles

Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.