Economic losses caused by natural disasters in Europe, Africa and the Middle East regions have reached $155bn, with only $27bn are insured, which shows a protection gap of 83%, said the General Arab Insurance Federation (GAIF) secretary general Chakib Abouzaid, speaking at the Arab symposium ‘Emerging Issues and Applications in the Arab Insurance Industry’, held in Jordan.
The economic toll in low-income and middle-income countries is much higher than the global average, with the average direct economic loss amounting to 0.37% of GDP for countries reporting through the Sendai Framework Monitor (2015-2022), he pointed out.
Arab initiative
Considering the growing threats from natural catastrophes in the region, the GAIF launched the Arab Initiative for Natural Disaster Risk Reduction in 2022.
The goal of the initiative is to consolidate underwriting capabilities at the Arab level and not just at the level of each country, through setting up a pool of capacities to face the growing risks of Nat CAT, which eventually would reduce the need to purchase excessive reinsurance capacity, said Mr Abouzaid.
The initiative is based on the concept of mutualisation to reduce cost on each country and dependence on the states’ budgets to alleviate the impact of natural disasters.
In addition, the initiative is a form of early and advance preparation for potential disasters, a contribution in strengthening Arab national security and an attempt to plug the insurance gap, he said. “The launch of the initiative came as a result of the growing awareness of the seriousness of what is expected in the coming years … and in light of the lack of preparedness (for Nat CAT) of governments and private institutions.”
Jordan Insurance Federation (JIF) CEO Muayyad Kloob said that translating the Arab Initiative into an action plan is extremely important, and the supervisory authorities must be involved in this endeavour … It is a vital initiative to prepare for what is expected in the future.”
Nat CAT insurance
In the same vein, JIF chairman Majed Smairat said that risks are mounting with clear indicators that there is a need to forge a collective movement by the region’s providers to face the contemporary and potential impacts of the climate change. He called for learning from regional experiences in dealing with Nat CAT and emphasised that there is a need to create a compulsory scheme for insurance against these risks. “Leaving this as a voluntary option is not going to yield benefits.”
Organised by the GAIF and JIF in Jordan, the two-day symposium attracted over 250 delegates from across the Arab world. M