Intense discussions are underway between domestic insurance companies in the UAE market and global reinsurers to keep next year's reinsurance premium rates at the same level as those of this year, to avoid hiking insurance premiums, according to the Emirates Insurance Federation (EIF).
The global trend indicates that reinsurance premium rates will rise next year because of recent frequent weather events and climate change, reported Emarat Al Youm.
Local insurers, to back up their position, argue that reinsurers chalked up large profits in previous years as a result of the absence of huge losses or compensation payouts in the UAE market, and that weather events that occur in one year should not be used as a basis for hiking premium rates.
Mr Mohammed Mazhar Hamadeh, vice chairman of the EIF’s Higher Technical Committee and chairman of the Motor Insurance Technical Subcommittee, told Emarat Al Youm, “We met more than one major reinsurance company, and most of them are leaning toward raising the prices of new reinsurance contracts in 2025.
Long-term relationship
“But our response as Emirati companies is that their relationship with the local market has been going on for decades, and all of the years have been profitable for them, and therefore one year should not be the measure for raising prices.”
He suggested that reinsurance premiums be based on data for more than one year, to avoid burdening the insured with increases.
He added, “Our position is clear, and we hope that our demands will be met by the reinsurance companies.”
Mr Mohammad Abandah, a member of the board of directors of the EIF and chairman of the Finance Subcommittee and Financial Crimes Technical Subcommittee, said, “During the current year, there was a global increase in reinsurance premiums rates across all insurance branches.” He added, “For example, reinsurance costs in Turkey rose by between 50% and 100% as a result of the earthquakes that occurred; while in European countries they rose by up to 50% due to the Russian-Ukrainian war; and in China, the increase ranged between 5% and 20%, and many others.”
He said that the most important factor that led to the rise in reinsurance premium rates is the large volume of claims and compensation payouts.