By Alok Das, Head of Corporate Risks - United Arab Emirates, Lockton MENA
The general insurance (GI) classes witnessing significant premium increases are construction/ erection all risks and engineering classes, property damage, bankers blanket bond, commercial crime, fidelity guarantee and directors’ and officers’ liability (D&O).
There are both global and regional factors responsible for these trends. Globally there have been major losses and several insurance and reinsurance companies have pulled out of the affected classes due to adverse claims results (both attrition losses and major claims) and several insurers have exited the region.
Investors and backers of insurance and reinsurance companies are not getting adequate returns and are seeking to invest in other sectors. In the Gulf Cooperation Council (GCC) region, we have seen increasing frequency of storm and heavy rain damages over the last few years. Insurers expect this trend to continue. Weather related losses are no longer considered “unforeseen” losses. Commercial crime claims have abounded and it is becoming increasingly challenging to find insurers who will write this class of business at reasonable rates of premiums.
For D&O even claims free policies are attracting 20-40% increases. Construction/ erection all risks and engineering classes are also showing increases of 50-100%. Carriers are also demanding higher deductibles.
There are several drivers for change. Global and regional capacity is shrinking. Major claims have been paid out by insurers. Climate change, weather related events and in 2020 the COVID-19 related claims continue to show a worryingly increasing trend. COVID-19 has posed challenges for most insurance companies as there have been several claims lodged and lawyers have been appointed to defend such claims.
For construction/ erection all risks and engineering classes, property damage, bankers blanket bond, commercial crime and D&O rates are expected to plateau out by the end of 2020. New carriers are showing interest in the region which was historically considered a “benign” claims geographical area. Certain classes like liability and cyber have remained relatively soft with more and more capacity being deployed by existing and new players. Workmen’s compensation and employer’s liability class hacw been reasonably stable.
For further information, please contact Alok Das under:
By Fadi Ashkar, MENA Head of Employee Benefits, Lockton MENA:
The impact of the lockdown and COVID-19 on claims in employee benefits is still unclear due to a number of changes the UAE government has implemented in the past months.
· The government has asked insurance companies to pay all COVID-19 related claims without any increase in premiums.
· Insurance companies were receiving hundreds of claims every day related to COVID-19.
· The average claim initially was USD 27K
· Now insurance companies are only paying for hospital admitted cases
· The average amount for these claims is about USD 40K (but much fewer claims than before)
· Between March and June the country was on lockdown so claims unrelated to COVID-19 were low.
The Abu Dhabi and Saudi Arabia governments have agreed to pay for all COVID-19 related claims.
For further information, please contact Fadi Ashkar under:
By Naji Abboud, Head of Facultative, Lockton MENA
Rate changes vary from one class of business to another but we are seeing increases mainly for energy, construction, financial institutions (FI), aviation, and marine hull. Insurers are pushing for increases from 25% to 100% or sometimes even higher depending on the risk. On FI business we are seeing directors’ and officers’ liability insurance (D&O) rates going up by 200% and the same applies to certain aviation risks as well. The market is pushing for price corrections and looking only to write business based on technical rates.
On standard P&C business we are seeing a modest increase between 5% to 10%. For general casualty renewal business we are seeing flat rates on unchanging exposures with few cases of price increases mainly on energy/power generation assets. This is due to the fact that the region is not litigious by nature, with a low claim environment. The slight increases on renewal business is mainly spilling over from hardening rates in London.
Regionally in MENA capacity was lost due to closure or downgrading of carriers, coupled with the fact that major Nat Cat losses around the globe have caused many markets to take a stringent approach to rectify their portfolios.
There have been a number of mergers and acquisitions (M&As) over the last couple of years and this activity will most likely increase over the next 12 months. We continue to see capacity shrinking and expect the market to continue to harden going forward.
For further information, please contact Naji Abboud under: