Middle Eastern insurers face market, regulatory and economic forces, says A.M. Best Senior Director
Mahesh Mistry, A.M. Best Senior Director of Analytics reviews a new special report that examines the regulatory and economic environments for insurers and reinsurers in the Middle East region.
“Market conditions in the Middle East are very challenging. A lot of these companies want to do cross-border business, and A.M. Best is looking at the markets that have become increasingly competitive,” said Mistry.
He further explained, “On the other side, there are regional and international players that want to come into the market. This mainly stems from the high growth rates that they are achieving in the Middle East. These have somewhat moderated in recent years, but they are still more attractive than mature markets at present.”
Mistry also believes low oil prices and the high level of competition are contributing to the backdrop of regional instability.
Mistry sees regulation as being very important to these markets and although the regulatory environment has been static, there is now considerable development, particularly within the Gulf Cooperation Council countries. He expects that competition will keep generating pressure on underwriting.
“These conditions are likely to continue during the course of 2017. With improvements in regulation, there should be better results coming through for a number of the market players. However, the competition and the pressure are still going to be inherent in the market. Those that adopt prudent and good practices and can manage their risks effectively are likely to see positive pressure. Those that cannot compete will find the market difficult and may see some downward movements,” said Mistry.