Arab Reinsurance Company: a new dimension
Home   |   Sitemap   |   Contact us
Follow us on
KSA - Insurance disputes center to resolve auto claims - Egypt announces ins. fees for electric, hybrid vehicles - Rivals ride rising rates as Lloyd's abandons some ship ins. - MENA Fintech Association established - Saudi insurance market to see mergers soon - UAE - Central Bank launches a platform to report suspicious transactions - Central Bank of Iraq establishes Takaful Company - Kuwait parliament to examine insurance bill - KSA - STC launches 5G commercial services - Saudi Tadawul to lure foreign flows on FTSE third phase inclusion - Facebook's new cryptocurrency Libra revealed - Saudi Arabia - 11.3% growth in banking sector profits in 2018 - Emirates Institute for Banking Concludes Fintech Program - KSA - Al-Etihad Insurance approves capital hike - Egyptian fintech startup, Paynas wins prize - Dubai Health to offer early intervention on patients of concern - Egypt’s FRA finalizes new Insurance Act - MetLife’s LumenLab using Blockchain to automate claims - Profits of GCC insurers at $324.27 m in Q1 - Egypt – Central bank launches 1st fintech portal - Saudi insurers Walaa, Metlife AIG ANB consider merger - Afya 2 Kuwaiti retiree health insurance now available - Oman – Al Madina Takaful to empower SMEs - Bahrain among top ecosystems for female start-ups - Egypt – Central Bank of Egypt signs two MoUs on fintech - Allianz closes on acquisition at New York's 30 Hudson Yards - IAIS outlines new 5-year plan to address insurtech - US cyber premiums up 10% to $2.03bn in 2018 - UAE - Car ins. premium drops 9.5% in H1 - China Life ins. co. premiums grow 4.7 pct in Jan-May - Dubai’s hospitals feel pain of ins. Delays - Abu Dhabi - SALT Announces Its Global Thought Leadership Conference - Moody’s expects stronger reinsurance profitability in 2019 - Bahrain’s economy achieves 2.73% Growth in Q1 2019 - S&P turns stable on Lloyd’s - UAE - RSA provides discounts to DEWA customers for home ins. - EgyptAir launches insurance policy tender for assets - Saudi Arabia - Foreign investment more than doubled in 2018 - Egypt - 'Seamless North Africa 2019' to discuss fintech trends - FDI inflows to Bahrain rise 6% to $1.5bln - Bahrain – InsurByte tackles insurtech trends - Saudi Arabia - Malath, ANB extend insurance deal - Citi MENA Fintech Challenge launched - ArabNet Beirut conference celebrates 10 years - Dubai - DIFC issues new insolvency law - Moody’s expecting stronger reinsurance sector profitability in 2019 - UK insurer Legal & General picks Amazon for blockchain deal - Dubai - AREA 2071 hosts 20 global startups worth AED42.2 m - Saudi Arabia - Medical insurance must for family visa extension - UAE - Medical Liability Law will reduce medical errors - Egypt – EGP 18.1 B ins. sector premiums in 4 months - Fintech set to expand in Mideast, Africa, says S&P - FinTech has power to disrupt global finance says IMF’s Lagarde - China mulls raising caps in equity investment for insurers - Fintech Startups in Lebanon: Financing the Future - Health Dubai: AED 20,000 fine for delayed ins. Approval - China's ins. sector runs smoothly with risks controllable - UAE – Need for compulsory fire insurance - Egypt – Agricultural ins. contract to cover natural risks - Egyptian Football Association gets ins. for Africa Cup of Nations - Egypt – Insurers pay 25% of revenues as admin expenses - Aviva to cut 1,800 jobs in expense saving push - Willis Towers Watson unveils new initiatives to fuel growth - Liberalisation in Myanmar a boon to insurers - Global reinsurance pricing not hard, but firming - June 1 rates expected to be up 10% – 30% for loss-affected accounts - Rate increases unlikely to stick without above-average losses - China's pet insurance market sees bright future - State Farm, USAA join forces to test blockchain solution - Saudi central bank grants licences to 14 fintech firms - Mastercard Partners With Bahrain FinTech Bay - SABIC renews long-standing partnership with Bupa Arabia - Burn-Out is a chronic condition according to WHO - Morocco - Marsh in the capital of Beassur - Belgium - 40% increase in the cost of fire and theft ins. - Egypt’s first FinTech accelerator promotes 10 startups - A.M.Best: Jordan ins. market remains highly competitive - Mohandes Ins. targets EGP 110m profit in FY19/20 - KSA - Al Ahlia gets SAMA's nod on 23% capital cut - Irish University to Offer Blockchain Master’s Degree - KSA – SAMA lifts the Ban on Union Cooperative Ins. - Egypt’s FRA wraps up Insurance Act consultations - NBB joins Bahrain Fintech Bay’s talent programme - AIB-Bahrain in bid to boost Islamic digital banking - Bupa Arabia provides health ins. to 299 orphans - Facebook to Roll Out Cryptocurrency in 2020 - Egypt - CBE to ban issuance of cryptocurrency without licenses - UAE economic growth expected at 2% in 2019 - Smart Dubai, DHA use AI to save lives - Alibaba Announces Blockchain Technology Integration - Gulf Capital acquires 70pc stake in Medica - Bahrain Association of Banks to launch sign language dictionary - Insurer First American left 900 m customer files exposed - Oman – Ins. premiums reached OMR 463.5 m in 2018 - UAE – Reinsurance absorbs AED 2.25 B premiums in Q1 - Egypt – EGP 12 monthly ins. premium on electronic cars - GCC bond and sukuk issuance surged by USD 32 billion in Q1 - Saudi fiscal deficit to reach 7 per cent of GDP in 2019 - UAE - Chinese conglomerate considers $ 10 B investment - MENA fund managers increase investments in Egypt - Bahrain - InsurByte Re-imagining Insurance 2019 - Sovereign investors favour unlisted tech - Amazon shareholders reject facial recognition ban - Kuwait - MoCI obliges all insurers to codify documents - Egypt - Regulator to review draft Ins. Act after Eid break - Dubai car rental agency to get Dh115,000 compensation - Bahrain National Holding acquires major stake in Health 360 - Bahrain - BBK launches a management program in fintech - Misr Ins. Holding targets EGP 4.2bn profit in FY19/20 - UAE - Etihad Credit Ins. and Dhaman partner to support growth - Dubai - DFM to organise international investor roadshow in New York - Egypt - Fawry to acquire EME International’s fintech division - UAE - Profits of 28 insurers at AED 591.65 m in Q1 - Egypt – Ins. sector has the highest average wage - Bahrain is among first countries to adopt fintech - Arabnet Beirut celebrates 10 years of technology - UAE - ADNIC partners with FAB through ‘payit’ option - ‘Game of Thrones’ ins. to reimburse fans who can prove spoilers - China allows insurers to use credit derivatives - ECI signs MoU with ADCB to support UAE businesses - Digital: Morocco in force at Vivatech Paris - Bitcoin price crashed by nearly 20% in minutes - Saudi non-oil growth to top 2.9% this year - Dubai – Overseas treatment through prepaid card - Generali posts solid growth and profits in Q1 results - Kuwait - MPs approve insurance law - Gulf Ins. Group announces net profit of KD 3.7m for Q1 2019 - NBB forges ahead with open banking in Bahrain - 2019 General Assembly - Bahrain highlights its plans to target InsurTech - KSA - Al Alamiya inks insurance deal with Riyad Bank - Visa partners with Bahrain FinTech Bay - Fintech is Key to Shaping Sustainable Islamic Finance - USA - Chinese Citizen Indicted in Anthem Hack of 80 Million People - Digital Ins: Aegon Life on-boards eBaoTech - CMA inaugurates health ins. diploma course for Omanis - Kuwait - Al-Roudhan lifts suspension of 3 ins. Companies - UAE: AED 24.4 million as profits for “Dubai Insurance” - UK: RSA sees strong growth opportunity in five industry practices - Moumen Moukhtar, the new President of Misr Insurance Co. - SAR 55 million profit of 13 Saudi insurance companies - Growth outlook lowered for GCC economies this year - Saudi Arabia may relax shares limit for foreign investors - Dubai to switch to 25% autonomous vehicles by 2030 - $1bn Mubadala fund set for big Abu Dhabi launch - Board of Directors of Arab Re: positive results in year 2018 - KSA - CMA Approves the Capital Increase of Walaa ins. - Bahrain - New strategies urged to tackle cybercrime - KSA – SAMA celebrates the graduate of 2nd bath in cybersecurity - GCC Board Directors Institute Launches Director Program - KSA finance ministry announces 30 years Sukuk issuance - Oman – Awareness campaign on health ins. Policy - SoftBank to invest $1bn in fintech firm Wirecard - Bahraini start-ups prospering thanks to Al Waha - Kuwait Finance House wins Fintech award - Samsung Developing its own Blockchain system - UAE - Mubadala was Awarded Anti-Bribery ISO certification - Saudi Arabia - 20 boxes in the Bold investment initiative - UAE - DIFC FinTech Hive launches career mentorship program - Kuwait - Six insurance companies suspended - First Bahrain Insurance Hackathon - Digital transformation of Middle East financial services is accelerating - KSA - Tawuniya to obtain qualitative leap in health practice - KSA - SAMA nods to Arabia Insurance’s capital raise - Saudi Arabia launches $3 bln package to support private sector - Etihad Credit ins. teams up with Sharjah Chamber - Development of driverless vehicle blockchain tech with IoT Firm - China - Blockchain-Enabled Notary Opens Office - South Korea - Hospital to create Blockchain Data Management - Sharjah Ins. to pay 7 fils/shr dividends for FY18 - UAE - Insurance House issues perpetual bonds - Egypt bourse unveils new insurance policy tender - Bahrain Kuwait Ins.: Profit at BD794,000 in Q1 - Arab Federation of Exchanges conference tackles SMEs - Dubai's economic growth will accelerate in 2019 and 2020 - World Bank to invest $200 million in Egyptian startups - Chile – New Cryptocurrency & Fintech Regulations - 60% of organizations trapped in a digital deadlock - Bahrain - SADAD launches Save Your Card Feature in Mobile App - Fintech: China's Wonder News opens $50m office in Bahrain - Abu Dhabi National Ins. Customer Service Excellence Recognised - 99% of UAE execs say innovation has accelerated - 94 Emiratis complete Artificial Intelligence program in UK - UAE ranks 6th in health and wellness index - Central Bank of Bahrain issues draft rules on Ins. Aggregators - Kuwait - Regulator tightens control over insurance sector - China Life insurance premiums grow over 11% - Bahrain set to host InsurByte conference in June - Misr Ins. to cover judges overseeing constitutional referendum - UAE adopts National Artificial Intelligence Strategy 2031 - World Bank: $25B for digital transformation in Africa - Telegram’s TON Partners with Wirecard to develop fintech - The Reserve Bank of India excludes cryptocurrency projects - Smart Dubai and Microsoft to accelerate digital transformation - Kuwait - Wethaq Ins. receives $6.48m from real estate fund - 2,000 tycoons move to UAE in 2018 - Saudi Arabia ranks second in global investment destination list - Report Shows Major Security Holes in Banking Apps - Kuwait - Regulator might suspend up to 12 insurers - KSA - Financial Sector Conference fulfills 2030 Vision - Misr Ins. posts $318.7 mln premiums in H1-FY2018/19 - Dubai – Global leaders to meet at Artificial Intelligence Summit - UAE Takaful Companies Catching Up with Conventional Peers - KSA - 3.2m Saudis, 8.1m expats enjoy health ins. - Oman – Regulator adopts XBRL for financials of listed firms - Bahrain launches fintech talent programme - Bahrain - Cigna Life Ins. receives a License from regulator - Saudi financial conference to attract hundreds of experts - ‘Bone-breaking’ ins. fraud gang busted in Italy - Jordan- Aqaba conference on marine ins. kicks off - Oman- Health insurance leading the market - Kuwait - Rising health insurance premiums - Egypt's insurance firms see boost in capital - Egypt: IFC launches support program for fintechs - Mashreq bank joins Startupbootcamp FinTech Dubai - China lays down national standards for ins. Industry - Lebanon - Calls for cooperation to enhance cybersecurity - Egypt to launch 8 investment areas, free zones in 2018 - Bahrain - Royal Decree Stipulates formation of Health Ins. Fund - Kuwait – Premiums of Wethaq Takaful grow by 16% in 2018 - IMF’s Lagarde says fintech will shake the system - Calls to establish digital economy body at Arab League - Oman - New health ins. initiative for house helps - Egypt - New health ins. provides coverage for all citizens - Saudi Arabia – Significant decrease in ins. profits in 2018 - DIFC launches roadmap for fintechs entering MEA - AAOIFI appoints new Secretary General - Egypt - AXA signs bancassurance deal with Ahli United Bank - GCC FinTech maturing and driving innovation - Bitcoin hits milestone with its 400,000,000th transaction - Saudi Arabia - 47% of vehicle ins. fraud due to damage mismatches - Abu Dhabi Dept. of Health: Health facilities to provide bills - Dubai - Seamless Middle East 2019 to tackle fintech - Egypt - Insurers pay EGP 2.5 B compensation in 2 months - UAE - 40% off on treatments not covered by insurance - Kuwait- MoH to form panel over 'amendment' of health Ins. - Blockchain Ins. Initiative B3i Expands Its Group of Investors - What UAE people claim for the most on travel ins. - UAE first country regionally in fintech - 100 Arab Start-ups Shaping the 4th Industrial Revolution - World Bank: Vision 2030 Diversified Saudi Income Sources - Investments to UAE expected to rise by 20% in 2019 - Mideast ‘biggest target’ of cybercrime - Lebanon – Oil and Gas summit emphasizes insurance role - MENA - Cyber threats beyond traditional attacks - Fintech Cairo: Fostering Innovation in Financial Inclusion - Moody’s: Takaful demand spurs higher premiums - Kuwait - Health Ins. fees from Jan 2020 to be KD 130 - Bahrain - FinTech Hackathon for Sustainability - Smart Dubai Office endorses du’s Blockchain Platform - UAE – Future Blockchain Summit - UAE - Coursera and INSEAD launch Blockchain Specialization - Dubai - DIFC FinTech Hive accepts applications - Ajman government to enact 'Smart Payment System' - UAE - Takaful premiums reached AED 3.7 billion in 2018 - GCC - Car ins. prices continue to decline in 2019 - Solidarity Bahrain launches the first Ins. Hackathon - UAE - SALAMA Islamic Arab ins. co. reports strong growth - 16 Saudi ins. firms log millions in losses in 2018 - UAE - Community contributions of 21 insurers at AED 2.95 million - Oman - Details of mandatory health ins. Revealed - Gulf Insurance to distribute 36% of par value as dividend - UK Insurers pay £1 M each day for vehicle thefts - UK - AM Best: negative outlook for 2019 non-life ins. - UAE - Among world's top 10 most positive on economy - Lebanon – Government targets transition to a digital economy - Saudi Arabia - Foreign entrants to boost ins. Market - KSA - Najm plays key role in developing ins. Technologically - China - Joint Venture to develop pension ins. - Two Bahraini women join top 100 fintech list
Search Search
Moebius Newsletter & Publications
Enlarge Font Minimize Font

Solvency II – Lessons for MENA Markets

The insurance sector is a core pillar of the global financial system covering a wide span of the economy from savings, investment and risk protection. The insurance industry differs from other industries by having the technical feature to buy and manage risk through variable maturities. Simply said, the core business model is built on pricing based on probability of risk being incurred; sharing part of the risk with (re)insurers, and then serving the customers through proper claim management practices when the risk is incurred.

Due to the important role in the economy, the insurance market is among the most heavily regulated sectors.

The insurance regulator or the supervisory authority intervenes in the insurance process for two fundamental roles: reduce the risk of insolvency of insurance companies, and protect policyholders’ rights.

Insurance companies' financial health and long term sustainability is assessed by their capital adequacy - as an ultimate residual buffer reflecting the company's asset liability management practice and ability to meet claims. They should therefore have sufficient capital to sustain their risk retention and maintain enough liquidity to match their liabilities towards policyholders. The approach for assessing risk capital is nevertheless rapidly changing given the macroeconomic, financial/market, and regulatory changes in both mature and developing markets.

Traditional capital requirements of insurance companies, known as Solvency I within the European Union’s single market, were originally "static" and calculated simply as a function of gross written premiums or claims incurred. 

Solvency I did not develop to cope with the changes in the economy and rising of new risks. The 2007-2008 financial crises showed the weaknesses of the existing regulations due to its insensitivity to risks and to the absence of scientific risk management and economic transparency.

This was an opportunity for regulators to continue and speed their already started discussions on economic solvency principles.

 Source: Deloitte1

Solvency II introduces market-consistent valuation of assets and liabilities, enhanced quality of capital, risk-based capital requirements, improved governance and risk management, a rough approach to group supervision, and strengthened market discipline through firm disclosures.  Solvency II focuses on the risk profile of each insurance company in order to promote comparability, transparency and competitiveness.

The main purpose of solvency II is to assess the minimum amount of capital that insurance companies must hold to reduce the risk of insolvency and promote confidence in the financial stability of the insurance sector.

A capital falling below the minimum required level generates an early warning to supervisors to interfere.

The major benefits of Solvency II are enhancing risk and capital management, which in return can decrease operational costs, strengthen product offerings, and provide support for more optimal management decisions such as planning and strategy. The valuation of economic capital plays an important role in assessing credit ratings; therefore, using Solvency II capital model increases faith in a company’s creditworthiness and helps reduce the cost of raising capital.

 Source: Asymptotix2

Now, looking closer in our regional markets – the Middle East – the insurance sector is considered to be in its niche stages with low penetration and density compared to mature markets. Products and distribution channels are classical, and driven by the local cultural and economic aspects in the region. Some challenges that the insurance sector faces include high level of competition, political instability, un-optimal investment levels, operational challenges, increasing reinsurance prices and low credit environment.

A huge gap exists between the various regulations across the MENA region

Most of insurance players and regulators in the Middle East have adopted simple capital regimes and risk management practices, mainly, similar to Europe’s solvency I,

where the regulatory capital requirement is calculated as a percentage of premiums and reserves. Only few countries, such as UAE, have implemented a risk sensitive model for the calculation of the minimum required capital. Other countries such as Lebanon and Oman have flat solvency requirements, while Yemen has none. Most of the GCC countries are still in the early stages of regulatory development. The same applies to the North African market, where countries are pushing for improved regulations. Qatar and Morocco are already adopting new prudential guidelines similar to international regulations.  In addition, other measures are also being adopted such as board members accountability and asset-liability management processes. Saudi Arabia has implemented as well a similar approach of a modified EU solvency formula. In 2015, the UAE insurance authority introduced several actions such as risk management, improved financial reporting standards and a modified solvency model.

Lack of risk based capital requirements does not allow accurate risk assessment and timely intervention by regulators, and does not help to allocate capital optimally.

In addition, the current regulations allow companies to freely state their risk appetite that is defined by common practices or shareholder preferences rather than a logical and analytical process.

The existing regime focuses on the financial risks rather than risk management.  Therefore, there is a consensus for the need of more risk based capital regimes and, in several countries, the possibility of adopting regulations similar to solvency II is being discussed. However, any new regulatory regime has to be easily understandable and adaptable to the local market. Europe for instance faced similar difficulties in implementing Solvency II in spite of more harmonized cross borders laws and capital markets within EU. This is driven by local sensitivities to equity markets, credit spread, and internal company operational assumptions.

A first step towards change is to understand the need to create a new corporate culture that recognizes the importance of identifying and managing risks. This helped launch new employment roles for all risk and capital management decisions such as chief risk officer in parallel with detailed procedures or risk reporting.

Companies should put in place proper procedures to incorporate risk management in the decision making process. Measures taken in this respect can go from setting risk management processes for key risks, such as underwriting market and operational, to having a specialized team supervising the implementation of the new regulation.

Establishing a new regulatory regime in the region is challenging due to inadequate resources, low level of capitalism, lack of historical data, and poor insurance awareness in addition to political, economic and social problems.

Insurance regulators in the region are recommended to use a risk-based capital as a steering tool for insurance companies, and as an approach to protect the insurance sector from risks

(i.e. political, investment diversification, reinsurance optimization, credit, etc.). The use of a customized capital model can therefore be more efficient than the EU solvency model. All solvency calculations might serve the ultimate purpose of helping management to direct the company and take economic decisions reflecting the underlying risks. As such, management should use the Solvency tools not as a regulatory requirement to satisfy the regulators, but as a regular internal tool embedded in the daily processes of the company's risk management framework and as a business enabler rather than a control function.

Responsible risk management departments can powerfully also disclose very transparently the underlying assumptions, deviations compared to previous period and to budget, and the key rationale behind each risk factor. Furthermore, a common community between insurance players and regulators will be established to implement a customized risk based capital model that is light in terms of complexity and solid in terms of covering the local market exposure, being in line with Global solvency II regulations. 

Middle East regulators are invited to cooperate together to share best practice lessons learned, and facilitate a smooth transition into a customized risk based framework that is part of the daily processes of insurance companies.

As a concluding note, the main challenge for the MENA region will be to find the right balance between extending insurance coverages while maintaining a financially stable insurer/reinsurer at an acceptable compliance cost. Encouraging transparency and openness is also another concern. As such,

the future performance of Middle East insurance industry strongly depends on the success of the future reform measures.

A stable and reliable regulatory framework is therefore essential for the business activities of insurers and for sustainable results in the insurance markets. The ambition is to have a healthy Middle East insurance sector that protects and meets the expectations of policyholders, shareholders, distribution partners, and governments.


All copyrights reserved, Arab Reinsurance 2016 ©