MEASA reinsurance players spy growth beyond GCC

Economic growth, low insurance penetration and more countries expanding their use of coverage are likely to help increase the uptake of reinsurance across the Middle East, Africa and South Asia (MEASA) region in the coming years, according to panellists.

Speaking at the ‘Tapping Reinsurance Opportunities in the MEASA’ virtual panel at the Monte Carlo Rendez-Vous chaired by the Dubai International Finance Centre (DIFC), panellists highlighted the abundant growth opportunities available to reinsurers and brokers in the region.

Peter Englund, head of Zurich’s commercial insurance operations in the Middle East, said that the biggest economies of the Gulf Cooperation Council (GCC) remained the prime opportunity for carriers in the region, with growing economies and stable financial markets.

He highlighted ongoing large infrastructure programmes in the region, as well as relatively low insurance penetration, as two factors which would help drive growth in the market in the years to come.

“I would say that four markets in the GCC stand out. If you look at where our main insured and reinsured assets are, 68 percent of those are in Saudi Arabia and the UAE, followed by other GCC markets such as Kuwait and Qatar, where we see a good amount of wealth—ie, either in sovereign wealth funds or in the central banks. This is a trait that is shared among these four countries,” Englund said.

“These are also growing economies with good fundamentals, so that is low insurance penetrations. We welcome the amount of infrastructure investment supported by plans such as Vision 2030 in Saudi Arabia and the Expo in Dubai.”

Englund added that the company was seeking to expand its footprint in the region to other markets, specifically growing economies in Africa, particularly as other countries move to diversify their economies away from dependence on oil exports.

“We are also looking to diversify. This is obviously an oil-dependent region, so it makes natural sense for us in the region to look more selectively at the less-dependent African markets as well, so this is also on our agenda.”

Beyond the GCC

Alessandro Cesare, senior executive officer for BHSI’s Middle East region, similarly highlighted that the opportunity in the GCC was the immediate attraction for the company opening its offices in Dubai back in 2018.

While that has been the primary target market, Cesare said the firm quickly realised that other countries across the region, in particular Turkey, India and Pakistan, had spotted the opportunity to do business in Dubai and the DIFC, showing the potential depth of the client base in the region.

“We decided to open in the Middle East in Dubai it was to capture the business rising from the GCC. However, we realised that there is more than the GCC, so if you look at our portfolio it is quite diversified.

“We have a quite large amount of business coming from Turkey flowing to the DFC, and we see continuous business as well from India and Pakistan that traditionally was going to other financial hubs, but once they recognised the recent decision-making in the region they tracked to this part of the world. Business from those countries is quite reasonable.”

Cesare pointed to growing interest in other countries in the region such as the natural resource-rich Central Asian states as a potential growth area in future, particularly as they begin to trade more with the GCC.

“Lately we have been developing a channel of business from countries such as Azerbaijan, Uzbekistan and Kazakhstan, in light of the recent joint venture the UAE set up with some industries in these countries, especially on the renewables side, that has driven us to look at these economies.

“It was a pleasant surprise for us that it was not only GCC. If you look around the major economies such as UAE, Saudi Arabia, Qatar, they all have their own vision. The opportunities are here in this region, but they have attracted more than just the GCC.”

Supportive regulators

Scott Lim, associate director at the Dubai Financial Services Authority, said that regulators in the region had to work with the reinsurance industry to help introduce more capacity and risk expertise to these economies.

Lim highlighted the importance of supporting innovative product development from a regulatory standpoint while maintaining high standards and promoting access to more international and global reinsurance firms.

“We need to facilitate the reinsurers to take a greater role in rebuilding and reshaping economies and societies. I think they have a fantastic role to play, especially in the MEASA region,” he said.

“The global reinsurers not only bring reinsurance capacity to the region, but they also bring underwriting expertise, expertise in risk management and other areas.

“Regulators should be promoting the introduction of new products, product development and new ways of looking at the holistic risk that exists in the region, and we should continuously work together to ensure we are better prepared for the next big risk—whatever that is.”

George Kabban, CEO of broker UIB Reinsurance in the Middle East, agreed that one of the major factors behind the historical growth in the region and its success in the future was the ability of the industry to work with the regulatory authorities.

“In my opinion the DFSA is unique in that it is staffed by talented professionals who are not politically motivated, they are not subject to the whims of political agendas. They are robust, fair, and disciplined—but they are approachable and supportive of the industry,” he said.

“Unlike maybe in other regions where you may think twice about talking to the regulator about an issue, the DIFC has a job to do to keep the market in shape and to ensure that policyholders’ interests are protected, but also to maintain the credibility and integrity of the market.

“They have done a fantastic job, they add value to our role, so I can’t sing their praises enough.”