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Middle East and North Africa Reinsurance Pricing Trends Q1 2022

Casualty insurance pricing in MENA declined 5%, on average, in the first quarter of 2022.

Casualty

Casualty insurance pricing in MENA declined 5%, on average, in the first quarter of 2022. Insurer capacity for larger risks continued to be challenging, leading some insureds to restructure program layers and associated pricing, and leading to increased dependence on support from international markets. Large organizations with loss limits in excess of USD$300 million required support from outside of the region.

Casualty insurance pricing in MENA declined in part due to the less litigious legal environment involving Sharia Law.

  • Insurer appetite remained limited for certain coverages, including off-shore risks, prevailing legal jurisdiction, product recall, and environmental liabilities.
  • Insurers continued to increase their emphasis on underwriting information, as opposed to market experience, as the basis for decisions on capacity deployment.
  • Major local markets, such as UAE and Saudi Arabia, continued to have sufficient, stable capacity for risks that fell within insurers treaties.

Property

Across MENA, year-over-year pricing for property insurance increased by an average of 5% in the first quarter of 2022, as in the prior quarter (see Figure 2). At the same time, capacity constraints generally relaxed, reflecting market discipline and suggesting a potentially positive outlook.

Insureds with large capacity requirements typically benefitted as programs could be restructured to more economically layered capacity.

Risk management — particularly responsiveness to risk improvement measures — and claims experiences were important differentiators.

The relatively low natural catastrophe exposure in the region continued to help insureds, with the exception of concerns with cyclonic activity in Oman and assets stored in the open, particularly vehicles.

Other highlights in the quarter included:

  • Coinsurance transactions continued to be used in the property insurance market as an alternative to reinsurance.
  • Claims-free programs and quality of risk continued to be determining factors regarding pricing within the (re)insurance market.
  • Insurers focused on declared values both in terms of property and business interruption given the current inflationary environment for declared values, as well as supply chain issues.