Middle East and Africa Pricing Q4 2021

Middle East and North Africa Insurance Pricing Trends

Understanding the MENA Insurance Market

Larger insurance programs, in MENA are generally placed via the reinsurance market, which follows changes similar to the international reinsurance market. This is due to local insurers in MENA, in general, not being able to act as a leader on large insurance programs, due to limited capacity. Therefore, larger more complex risks are more dependent on the reinsurance market.

Bahrain

Overall, insurance pricing increases moderated in the fourth quarter of 2021, with limited increases for some clients and coverages. Pricing typically followed global trends for larger clients.

Casualty: Pricing in the casualty market remained stable in the fourth quarter.

• Extension of policies prior to renewal was challenging.
• Auto liability is a compulsory insurance connected with the registration of any vehicle; auto liability rates and excess coverage remained stable.

Property: Pricing in the property market remained generally stable in the fourth quarter, due to insurers relying on reinsurance treaties to meet the local competition.

• Some local insurers reduced capacity due to internal guidelines or treaty restrictions.
• Some large risks experienced moderate pricing increases.
• Bahrain is generally a low-catastrophe area, however, when international markets were accessed, pricing was typically higher with some restrictions in coverage.

United Arab Emirates

Casualty: Casualty insurance market pricing remained stable and competitive, with capacity generally sufficient.

Property: Property insurance market pricing remained generally stable. Some local insurers showed a decline in appetite due to internal guideline issues and/or treaty restrictions.

Saudi Arabia

Casualty: Liability pricing continued to stabilize, with increased demand from various business segments, particularly engineering, procurement, and construction (EPC) and operation and maintenance (O&M) contractors venturing into new projects. There was an increase in aviation liability queries due to privatization of the aviation sector. Aviation liability pricing increased more than 10% in the fourth quarter.

Property: Local insurers sought to increase retentions on non-catastrophe risks. Some global insurers engage with local insurers on a coinsurance basis to retain a greater part of the risk within Saudi Arabia, thereby relying less on more expensive reinsurance markets. There is a downward pricing trend in non-catastrophe risks where insurers have high retentions, whereas large catastrophe risk experienced more stable pricing. Insurers often increased treaty capacities, where possible, which increased overall capacities of the local markets.

Qatar

Casualty: Pricing in the fourth quarter in the casualty insurance market remained generally stable.

• Some clients requested higher limits for general liability; however, the local market capacity was limited meaning that any higher limits were supported by regional/international reinsurers.
• With the FIFA World Cup approaching, the requirement for professional indemnity insurance may increase in 2022.
• Auto liability is compulsory insurance in Qatar, with no cap on the liability and pricing fixed depending on capacity. On comprehensive coverage, there were some reductions in rates for clients with good claim history.

Property: In general, property insurers sought to increase deductibles and restrict coverages.

• Property prices generally increased in the fourth quarter.
• Coverage improvements, including extensions to the policy period prior to the insurance program renewal, have become challenging to obtain.

Oman

Insurance pricing was generally stable in the fourth quarter of 2021, with the exception of property and engineering risks, which experienced increased claims following Cyclone Shaheen.

Casualty: Many insurers experienced a large number of motor liability claims during periods of heavy rain in Oman. Despite those claims, pricing for motor liability continued to decrease.

• Following some recent losses, local insurers are likely to be more selective in deploying capacity and limiting treaties for natural catastrophe exposures.

Property: Oman experienced Cyclone Shaheen in October 2021, followed by flooding incidents that resulted in claims; most insurers experienced significant losses.

• The cyclone claims exasperated an already challenging insurance market for property and engineering portfolios.
• Property insurance pricing increases ranged from 100% to 150%, with increases in deductibles and stringent loss limits for natural catastrophe risks.
• Further losses from a cyclone or flooding incident could potentially deteriorate market capacity and appetite for natural catastrophe risks, potentially leading to their exclusion in the future.

Egypt

In the local insurance market in Egypt, overall pricing was stable, with generally minimal or flat increases. Purchasing coverage from international markets tended to bring pricing increases, in line with global trends.

Casualty: Pricing was generally stable as local markets had sufficient capacity.

Property: As most of Egypt's businesses are not in catastrophe areas, property insurance pricing was stable, particularly when local markets provided coverage.

• Accessing international markets generally brought higher increases.
• Clients in catastrophe areas generally saw higher rates and, for some, restrictions in coverage.

South Africa

Insurance pricing in South Africa is heavily dependent on risk specifics. In some instances, international markets are competitive with local ones, in other cases their pricing is higher.

Casualty: Year-over-year pricing in casualty markets generally increased between 10% and 15% in the fourth quarter of 2021.

• Product recall and spread of fire coverages experienced increased rates and deductibles, and a reduction in available limits.
• Contaminated product insurance experienced significant capacity challenges, especially on food-related risks.
• Going forward, insurers are expected to continue to restrict coverage for casualty products.

Property: Average year-over-year pricing increases for property insurance in the fourth quarter of 2021 ranged from 10% to 45%. At the same time, there was a general reduction in available limits.

• Increases varied depending on the nature of risk, claims experience, and overall risk management.
• There was an increase in the number of insurers that are averse to risks involving food production.
• Capacity declined and pricing increased in the property, terrorism, and sabotage (PTS) market following recent riots, with increases exceeding 100% in most cases.