JEDDAH – An increasing number of global reinsurance firms are eyeing the Middle East and North Africa (MENA) region as its markets offer new opportunities for higher growth than developed markets, according to Bin Shabib Associates (BSA), a leading regional law firm that offers tailored advice for insurance and reinsurance firms seeking to enter the region.
BSA said that the impending rollout of compulsory insurance in many countries, regulatory improvements, and the scope for growth due to low insurance penetration, are attracting more global firms to the region.
"With profits in developed markets under pressure amidst the current economic crisis and the centre of gravity of growth shifting to emerging markets, the Middle East is high on the growth agenda of global re-insurance firms," said Irshied Tayeb, Regional Head of Insurance and Re-Insurance Services for BSA. "Over the past year, we have received a surge of interest in our incorporation services from international firms keen to enter the region either through their own offices or through acquisitions and joint ventures," he added.
Recently, BSA assisted Reinsurance Group of America (RGA), one of the world’s largest reinsurance companies, in completing the extensive licensing and incorporation process required to establish a regional office in the Dubai International Financial Centre (DIFC). The firm is currently assisting several other Insurance, Re-Insurance and Re-Takaful companies to set up in the DIFC.
"Global reinsurance companies have traditionally conducted business in the region by placing the business through international markets, mainly in London, which has resulted in higher costs and less efficiency when underwriting the risk.”
“This has led to less competitive terms and conditions and a higher cost of reinsurance, which ultimately has translated into lower cover for a higher premium for the end user," said Tayeb.
"As more global re-insurance firms establish regional offices, we will see an improvement in market efficiencies and more competitively priced insurance products, which in turn will stimulate further growth and expansion," he added.
New compulsory insurance, set to be introduced by many GCC countries, is expected to drive significant growth in the sector. – SG