Middle East Insurance Review (MEIR), in solidarity with the insurance market, has started a special series named "Middle East Conflict: The MEIR Dialogue" to discuss the insurance impact of the armed confrontation across MENA as well as globally. MEIR kicks off the series with a video interview with Mr Yassir Albaharna, Group CEO of Trust International Insurance & Reinsurance Co (Trust Re).
In the interview, Mr Albaharna said that the current climate presents a critical opportunity for insurance companies in MENA to take stock or validate and test their operations. Insurers should evaluate which covers are working, which covers have not worked, what the coverage gap is and how to model capital strain effectively. This will allow the insurers to assess how well risks are being managed.
He added that upcoming reinsurance renewal periods, specifically 1 July, will serve as the litmus test for rate adequacy and the validation of operational assumptions.
He said that MENA insurance companies generally maintain low retentions, meaning that a significant proportion of war and political violence risk is reinsured internationally.
He said that while war typically affects all business classes, the most prominent impacts are seen in:
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Marine & Aviation: Marine is often the first point of entry for war-related effects.
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Credit & Business Interruption: Disruption in supply chains and logistics is currently a more significant factor than physical losses.
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Political Risk: Geopolitical risk modeling is not a "perfect science". The capability to price and to model geopolitical risks is a specialty in markets like London.
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Cyber Risk: Such risk is increasing today. Cyber attacks are expected to intensify even after the war ends.
Mr Albaharna pointed out that the primary fear for reinsurers is aggregation—where a single event causes massive losses across multiple lines of business simultaneously, such as marine, energy, credit, and property.
He added, “And as we speak now, I'm sure many reinsurers are carefully trying to do their sums.” He said that the reinsurers are assessing how much exposure they have in each country as a result of the war. They are also reviewing strategies to mitigate risk.
To view the interview, please click on this link.