Middle East and North Africa Insurance Market Report
The Middle East and North Africa (MENA) insurance market has been affected by numerous factors in the last 12 months.
COVID-19 has resulted in an economic slowdown, which has adversely affected insurers and led to increased pricing and reduced capacity in many areas. This is affecting local markets – at a time when companies are focused on reducing costs.
In MENA, local insurers are generally not able to act as a leader on large insurance programs, due to limited local capacity, and are more dependent on the reinsurance market. As a result, larger insurance programs placed in MENA have been affected by changes to the international reinsurance market, which is transitioning and seeing widespread increased rates and reduced capacity.
Consequently, international reinsurers are taking less share of many risks in the MENA region. Additionally, reinsurers are becoming more selective on the risks they do reinsure, and applying more exclusions – for example, around pandemic-related claims. Reinsurers have also imposed stricter measures on premium payment, in order to improve liquidity and control bad debt reserves.
As rates increase in many different parts of the MENA region, risk management will become even more important, especially as many companies look to restructure their insurance programs and, in some cases, retain more risk.
In order to explore retaining more risk – as opposed to buying insurance from the insurance market – many companies will need to improve their understanding of their risks and how they are managed.
It is beneficial for companies to highlight their post-loss capabilities and their business continuity management capacity. Should a loss occur, it is prudent that a company has in place a comprehensive and well-tested set of protocols to ensure the swift return of operations. This preparedness should be highlighted, as it will positively affect a company’s insurance purchases.