MENA Reinsurance rates are expected to harden
Wednesday, 10 05 2016, Category: Insurance and Reinsurance, Country: Middle East
According to the 2016 MENA Reinsurance Barometer, published today by the Qatar Financial Centre, the MENA reinsurance markets are expected to harden over the next 12 months. For the first time since the launch of the annual survey in 2013 a majority of executives polled believes that average reinsurance rates in the region will increase. This turnaround in expectations is the result of a series of major insured losses which affected the region over the course of the past 12 months and the subsequent retrenchment of some leading market participants.
"Robust insurance sector growth, primarily driven by compulsory schemes, is the most relevant strength of the MENA reinsurance marketplace," says Yousef Mohamed Al-Jaida, Chief Executive Officer and Board Member of the Qatar Financial Centre (QFC). "Going forward, reinsurers will play an important role in supporting economic diversification strategies across the region as governments are keen to reduce their dependence on hydrocarbon revenues. This transformation is set to result in a significantly more diverse and sophisticated risk landscape which presents major opportunities to insurers and reinsurers."
The MENA region is an attractive high-growth, low-catastrophe (except for Algeria, Iran and Turkey) market, with positive effects on the diversification of risk portfolios of global reinsurers. However, many reinsurers operating in the region have recently suffered significant losses, especially in the property line of business, and view current pricing levels as technically insufficient. 52% of executives polled therefore believe that average reinsurance rates in the region will increase, markedly up from 19% last year. Reinsurance terms and conditions are also expected to tighten, by 62% of executives, up from 29% in 2015. Higher rates and tighter conditions (higher deductibles, for example) are bound to translate into an improved profitability, as expected by 52% of executives polled, a massive increase from last year's 19%.
Source: Qatar Financial Center