Fifth meeting with The Reinsurance Tutorials, episode #5 - Season 4
Hi everybody 👋
Today is the launch of the 5th episode of the Reinsurance Tutorials season 4!
We will talk about "MENA Region: How regional diversification impacts insurance and reinsurance".
This topic will be addressed by our Arundo Re expert Pierre SALAMEH.
Let’s start! ⏬
[Pierre]: Hi, I'm Pierre Salameh from Arundo Re. Welcome to this tutorial on the MENA region.
Why is MENA such a priority for insurers and reinsurers?
Let’s talk about what makes these markets unique. Economic development is the main driver of insurance industry’s expansion. Famous for their energy riches and financial resources, the leading authorities in the Gulf Cooperation Council invest in infrastructure, education, business creation, tourism, and opportunities for young people. It makes them relatively casualty-free and allow them to attract expatriates looking for job opportunities. Markets like Oman and Bahrain are new and growing.
There are continent-wide projects, such as Europe’s interventions in the Moroccan Sahara, and flourishing collaboration among countries like the Emirates and Egypt.
Besides, the prestigious FIFA Club World Cup took place in Qatar, and the Saudis promise a resplendent vision for the World Cup 2034. Morocco as well should not be outdone for the future organisation of FIFA's World Cup in 2030.
What are the challenges in the MENA region?
The MENA region suffers from the effects of direct and indirect armed conflicts that impact on goods and marine and non-marine transport. Other business lines are affected by occasional natural disasters, which have increased due to climate change and artificial cloud bombing. Massive losses in human life and damage to property and infrastructure can lead to unprecedented claims levels. Therefore, insurance companies are directly affected by political instability, regulatory changes and geopolitical tensions.
These factors can disrupt financial markets, impact insurers' revenue streams, and threaten their solvency. In some countries, inflation poses a challenge to pricing and terms and conditions, which are renewed annually under the supervision of rating agencies.
What are the solutions?
To address MENA’s challenges, and the shortage in CAT capacities worldwide,
insurers must take a proactive approach to risk management by investing in new technologies, diversifying their portfolios, and strengthening their innovative capacity. We need to create a CAT Pool in each country, following the model of Algeria and Morocco. Adaptive pricing can soften the effect of inflation.
In addition, collaborating closely with governments and regulators can help mitigate risks and enhance the resilience of the sector. MENA region is diverse and cooperative.
We know from experience that local regulators are keen to meet international standards and apply them in the region, using a tailored approach to suit the characteristics of each local economy and culture. In the 21st century, the Middle East and North Africa region remains the center of major world activities and business. Despite the challenges, it remains a resilient place and a mine for economic resources and financial riches. The Reinsurance industry is a key player in the MENA region and many times tightly linked to geopolitics. The more political and financial stability there is, the more our business thrives.
Thanks for your attention.
See you soon for the next episode 👋
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