Insurance penetration rates in the UAE reached 2.76 per cent in 2016 with a total premium growth of 1.04 per cent, according to AM Best. Silvia Razgova / The National
Insurance penetration rates in the UAE reached 2.76 per cent in 2016 with a total premium growth of 1.04 per cent, according to AM Best. Silvia Razgova / The National

The risks of protectionism lurk in the region's reinsurance industry, AM Best says



An open and competitive reinsurance market is vital for emerging economies in the Middle East to ensure risk transfer and market development, a new report from AM Best revealed on Saturday.

According to the insurance rating company's study,  this approach is needed at a time when economic integration and globalisation have been cast aside in favour of "populist and nationalist sentiments around the world" amid geopolitical pressures, the fallout of low oil prices, Brexit and the protectionist stance of Donald Trump in the US.

Examples of protectionist measures can be found in Middle East countries such as Saudi Arabia, the UAE, Jordan and Egypt where regulators, looking to safeguard local policymakers and insurers, have introduced restrictions on foreign ownership and limits on foreign investment.

Valeria Ermakova, a senior financial analyst at the rating agency, said that placing risks primarily within national borders creates a problem of potentially weaker reinsurance security, given that emerging markets generally have lower levels of financial strength by international standards.

“This issue is amplified by premium funds being invested in devaluing local assets, considering the challenging economic conditions and volatile financial markets that some of the countries experience,” she said.

“Furthermore, isolation of insurance markets may lead to a lack of consumer choice and inadequate service levels as national players are not able to benefit from the expertise of their peers in the global market, where technology and innovation are drivers of the industry.”

While a number of catalysts for the growth of the UAE's insurance industry are in place, its profitability has been weighed down by cut-throat competition with 61 insurance firms registered by the UAE Insurance Authority at the end of 2015.

However, insurance penetration rates in the UAE  reached 2.76 per cent in 2016 with a total premium growth of 1.04 per cent, according toAM Best. The biggest growth area was seen on life premiums with a 3.54 per cent increase compared to a 1.16 contraction  on non-life premium growth. This reflects some firms quitting the non-life insurance business altogether in the UAE, such as Zurich, which exited in November 2015.

Saudi Arabia, meanwhile, saw its insurance market penetration reach 1.55 per cent last year but with a higher total premium growth of 1.43 per cent.

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The rating agency highlighted a number of domestication moves for the region’s insurance sector, such as regulations mandating staff localisation.

This presents an issue for the market as until now insurance companies in the Middle East have largely been staffed by expatriates, and the intention to protect domestic writers “has come at a time when Middle Eastern countries are looking to reduce dependence on oil and open up their economics to increased foreign investment”.

Saudi Arabia’s nationalisation programme has seen a complete Saudisation of its banking industry, something it now wants to replicate in its insurance sector with similar efforts also adopted in Qatar and the UAE.

AM Best said this can create pressure for companies to employ staff that lack the requisite skills to manage insurers.

Salman Siddiqui, associate director, said: “Excessive protectionism, such as the discouragement of cross-border reinsurance placements, may have major negative implications as it creates an unnecessary exposure of national assets and government funds to claims from catastrophes or man-made disasters, as well as to an accumulation of losses. On the other hand, the availability of reinsurance capital from a diversified international panel brings down risk-transfer costs and helps to disperse risk.”

However, the landscape is changing as the Middle East’s hydrocarbon producers, including the UAE and Saudi, have faced fiscal pressure amid low oil prices encouraging them to diversify their economies and increase the involvement of private companies in the sector.

Consequently, the Saudi government is now considering allowing the level of foreign ownership in legal entities to increase from 30 per cent to 49 per cent with the UAE considering an increase from 20 per cent to 49 per cent.

AM Best said that it expected oil-producing countries to seek a balance in the coming years by opening up their economies while also ensuring “adequate levels of insurance domestication”.

The report also highlighted protectionist moves made by other Middle East nations, such as Jordan and Egypt, where restrictions have been placed on the investment activities of insurance companies, something the rating agency considers a risk for the insurers in those countries.

In Egypt and Jordan, insurance companies are permitted to invest their funds only in local securities and assets. This reduces investment opportunities for insurance companies, who require well-rated, highly liquid assets to support their underwriting operations, said the rating agency.

"As a result, Egyptian insurance companies have primarily invested their funds in short-dated Egyptian government bonds, while Jordanian insurers largely target domestic equity listings,” the report said.

The%20specs
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How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

Bio:

Favourite Quote: Prophet Mohammad's quotes There is reward for kindness to every living thing and A good man treats women with honour

Favourite Hobby: Serving poor people 

Favourite Book: The Alchemist by Paulo Coelho

Favourite food: Fish and vegetables

Favourite place to visit: London

Joker: Folie a Deux

Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson

Director: Todd Phillips 

Rating: 2/5

The Baghdad Clock

Shahad Al Rawi, Oneworld

'The Coddling of the American Mind: How Good Intentions and Bad Ideas are Setting up a Generation for Failure' ​​​​
Greg Lukianoff and Jonathan Haidt, Penguin Randomhouse

Heather, the Totality
Matthew Weiner,
Canongate 

Company name: Play:Date

Launched: March 2017 on UAE Mother’s Day

Founder: Shamim Kassibawi

Based: Dubai with operations in the UAE and US

Sector: Tech 

Size: 20 employees

Stage of funding: Seed

Investors: Three founders (two silent co-founders) and one venture capital fund

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
Call of Duty: Black Ops 6

Developer: Treyarch, Raven Software
Publisher:  Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5

UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

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The specs

Engine: 2-litre 4-cylinder and 3.6-litre 6-cylinder

Power: 220 and 280 horsepower

Torque: 350 and 360Nm

Transmission: eight-speed automatic

Price: from Dh136,521 VAT and Dh166,464 VAT 

On sale: now

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

UAE currency: the story behind the money in your pockets
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The low down on MPS

What is myofascial pain syndrome?

Myofascial pain syndrome refers to pain and inflammation in the body’s soft tissue. MPS is a chronic condition that affects the fascia (­connective tissue that covers the muscles, which develops knots, also known as trigger points).

What are trigger points?

Trigger points are irritable knots in the soft ­tissue that covers muscle tissue. Through injury or overuse, muscle fibres contract as a reactive and protective measure, creating tension in the form of hard and, palpable nodules. Overuse and ­sustained posture are the main culprits in developing ­trigger points.

What is myofascial or trigger-point release?

Releasing these nodules requires a hands-on technique that involves applying gentle ­sustained pressure to release muscular shortness and tightness. This eliminates restrictions in ­connective tissue in orderto restore motion and alleviate pain. ­Therapy balls have proven effective at causing enough commotion in the tissue, prompting the release of these hard knots.

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Company name: baraka
Started: July 2020
Founders: Feras Jalbout and Kunal Taneja
Based: Dubai and Bahrain
Sector: FinTech
Initial investment: $150,000
Current staff: 12
Stage: Pre-seed capital raising of $1 million
Investors: Class 5 Global, FJ Labs, IMO Ventures, The Community Fund, VentureSouq, Fox Ventures, Dr Abdulla Elyas (private investment)

Company%20Profile
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No_One Ever Really Dies

N*E*R*D

(I Am Other/Columbia)

BUNDESLIGA FIXTURES

Friday (all kick-offs UAE time)

Hertha Berlin v Union Berlin (10.30pm)

Saturday

Freiburg v Werder Bremen (5.30pm)

Paderborn v Hoffenheim (5.30pm)

Wolfsburg v Borussia Dortmund (5.30pm)

Borussia Monchengladbach v Bayer Leverkusen (5.30pm)

Bayern Munich v Eintracht Frankfurt (5.30pm)

Sunday

Schalke v Augsburg (3.30pm)

Mainz v RB Leipzig (5.30pm)

Cologne v Fortuna Dusseldorf (8pm)

 

 


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