Workers in the "sector" attributed it to "Corona" ... and expectations of higher prices
"Global reinsurance" is tightening the terms of contracting with local companies
Negotiations are currently underway in preparation for contracting in January.
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The negotiations currently underway between local insurance companies and global reinsurance institutions are witnessing a tightening of the terms of the contract expected during next January, by the latter, due to the Corona pandemic.
Officials in insurance companies told Al-Emarat Al-Youm that global reinsurance companies have been greatly affected by the Covid-19 pandemic and want to compensate for their losses by raising the prices that will be transferred to the final consumer represented by the insured, expecting the prices of some documents to rise. Especially in some sectors directly affected by the virus.
Good rating
In detail, the Chairman of the Non-Marine Insurance Committee at the Emirates Insurance Association, Muhammad Othman, said that the global reinsurance institutions that local companies deal with must be well-rated at “A or B Plus” and not less than that, so the options are limited. Before the local company upon its annual contract with reinsurance companies.
Othman added that negotiations are currently underway in preparation for the contract during next January amid a strict trend by reinsurance companies due to the Corona pandemic, which greatly affected the results of their business, and for this reason they are heading to raise prices to compensate for their losses.
He indicated that any price hike is automatically transmitted to the final consumer, i.e. the insured, but this will not include all sectors, but only those that have been severely affected by the virus.
Individual negotiation
Othman added that each local insurance company negotiates individually with international reinsurance institutions and is not part of a conglomerate or grouping of local companies, so each company chooses what suits it and according to the insurance branches that provide services in it.
He explained that this is not the first time that reinsurance companies have been tough, as there are previous cases such as the presence of hurricanes, fires, or epidemics in certain areas that caused losses, indicating that these institutions imposed higher prices in all of these cases.
Harmonic formula
For his part, the CEO of Al Wathba National Insurance Company, Bassam Gilmiran, said that there are several matters that affected the insurance and reinsurance companies, the most important of which is the Corona pandemic, expecting that the contracting terms will witness due regard for this circumstance.
He added that what is currently going on are negotiations with reinsurance companies, pointing out that the UAE is the largest Arab market for insurance, and it is in the interest of global institutions working in the field of reinsurance to reach a compromise formula that takes into account the interests of both sides.
Pricing difference
And Gelmeran indicated that the negotiation takes place between each insurance company separately, indicating that the position of the company that has achieved positive results in its work is better in terms and contracts, unlike those that have suffered a loss or have negative performance.
He stated that the Coronavirus circumstance changed many market data and put pressure on document prices, pointing out that this situation is expected to be felt by the insured in the UAE and abroad, as the pricing must differ.
Gilmiran stated that local insurance companies deal with more than one reinsurance company according to the controls of the Insurance Authority, and that they pursue a policy of risk distribution and take into account good reputation when contracting, and this strengthens the companies' ability to take the best terms.
Good conditions
In turn, the CEO of Dubai Islamic Insurance and Reinsurance (Aman), Jihad Vitrouni, said that the strictness by international reinsurance companies came against the background of their unsatisfactory results, and this occurs from time to time as long as there are abnormal conditions such as hurricanes, disasters or fires.
He pointed out that strictness is applied at the level of insurance companies in all countries, but the review of the results of some local companies affected their negotiating position, stressing that some companies succeeded in reaching good conditions, while others were unable to due to their weak financial results.
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