Summations and recommendations made at the 19th Annual Gulf Insurance Forum (GIF) held in Dubai on 15-16 October 2024 focused on growing weather-related risks and the best means to confront them. The Forum also addressed the increasing importance of technology in the insurance market.
Climate Change
Discussions at the Forum highlighted the increasing frequency and severity of natural disasters, such as floods, cyclones, sandstorms, and extreme heat events, affecting the GCC region. Recent incidents underscore the region's growing vulnerability to natural disasters, driven by climate change and rapid urbanisation. Despite the region's historical resilience, the need for a proactive approach to disaster management and insurance is becoming critical.
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Key concluding remarks
• Increased Vulnerability: The GCC is increasingly exposed to natural disasters due to climate change, urban development, and coastal expansion. Traditional infrastructure is ill-prepared for the scale of these disasters.
• Insurance Gaps: Many businesses and households in the GCC remain uninsured or underinsured for natural disasters, exposing them to significant financial risks. This is exacerbated by the high cost of catastrophe insurance and a lack of awareness about the necessity of coverage.
• Need for Proactive Insurance Strategies: The current insurance models are reactive, primarily responding to disasters rather than encouraging preventive measures. The Forum emphasised the need to shift towards resilience-focused strategies that promote risk management and disaster preparedness.
Recommendations
• Risk Assessment Improvements: Insurers in the GCC should utilise advanced technologies like AI, satellite data, and predictive analytics to improve risk assessment models. These tools will enable more accurate pricing of disaster insurance and encourage preventive measures.
• Tailored Insurance Products: Tthe insurance sector should develop more flexible insurance products, such as parametric insurance, which can provide faster payouts based on pre-defined triggers (e.g. rainfall levels) and microinsurance for vulnerable populations.
• Public-Private Partnerships (PPP): Governments and private insurers should collaborate to create national disaster relief funds and regional reinsurance pools. These initiatives will help spread financial risks, reduce premiums, and ensure quicker responses to disasters.
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Role of technology in today’s insurance market
The Forum also shone the spotlight on the digital transformation of the insurance sector through technologies such as Generative AI, Machine Learning (ML), Telematics and the Internet of Things (IoT). These technologies are reshaping insurance underwriting, claims management and risk assessment processes.
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Key concluding remarks
• Era of Intelligent Insurance: AI and ML are revolutionising the insurance industry by enabling more accurate underwriting, dynamic pricing models, and real-time claims processing. The Forum emphasised the need for insurers in the GCC to adopt these technologies to enhance efficiency and customer experience.
• Data Analytics for Risk Management: Data-driven approaches, such as predictive modelling and big data analytics, are key to improving risk assessment and decision making in the insurance sector. Shifting from traditional methods to data-driven strategies will enhance the ability of insurers to manage risks more effectively.
• Ethical and Regulatory Challenges: The rapid adoption of new technologies presents ethical, legal, and regulatory challenges. These include issues of data privacy, regulatory compliance, and the need for standardisation of practices across the region.
Recommendations
• Adopt AI and ML Technologies: Insurance companies should invest in AI and ML to improve underwriting accuracy, enhance risk management, and optimise claims processes. This will lead to more competitive insurance products and services in the GCC.
• Focus on Data Analytics: Insurers must build robust data analytics capabilities to leverage big data and predictive modelling for better decision-making. Investing in talent and infrastructure for data-driven strategies will be key to staying competitive.
• Navigating Regulatory Challenges: The Forum recommended working closely with regulatory bodies to develop clear guidelines for the ethical and legal use of AI, ML, and IoT in the insurance sector. Harmonised regulations across the GCC will be essential for smooth technology adoption.
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In conclusion, the 19th GIF emphasised the critical need for the GCC insurance sector to evolve by integrating technology, improving disaster resilience, and adopting proactive risk management strategies. By embracing innovation and collaboration, the GCC can better manage future risks and ensure the stability of its economies and societies in the face of growing challenges from both natural disasters and digital disruption.
Organised by the Emirates Insurance Federation, the 19th GIF was held with the theme “Recent Floods in the GCC and Landscape of Digital Disruption”. The event attracted over 200 delegates.