Strong risk management is essential, Lord Levene warns delegates in Qatar
In his keynote speech at MultaQa Qatar, an insurance conference in Doha, Qatar, Lloyd’s chairman Lord Peter Levene warned delegates that the Gulf Cooperation Council (GCC) would not be immune from an increasingly risky world. “There is a changing risk environment,” he said.
Despite the Gulf commonly being considered a “non cat” region, Levene drew attention to last year’s Cyclone Gonu in Oman - the strongest storm to hit the Arab world since records began in 1945 - and recent snowfalls in Saudi Arabia, which led to ten deaths.
“The experience is very similar to patterns elsewhere in the world. Unpredictable and intense impacts at a local level” will become more commonplace as climate change becomes an increasing reality, he said.
Levene also mentioned the risk of flooding and the fact that few businesses in the Gulf have flood insurance in place. When Dubai was hit by intense rainfall last year, there were flash floods as the city does not have a proper drainage network.
Terrorism and political risks are also giving rise to concern. Terrorists have made it clear they will strike economic targets and iconic buildings. The growing concentration of risks in cities such as Dubai and Doha should be taken seriously, cautioned Levene, particularly “with tensions in the wider Middle East running high.”
“Risk management must be at the heart of the economic strategy
The growing scale of projects in the GCC and the sheer pace of development is challenging in itself. These incredible growth rates may be impressive, but it has led to greater exposures.
The rush to build in Dubai and Doha is causing great pressure on resources, said Levene. “There have already been cases where structures have had to be rebuilt” because corners had been cut, he said.
A new emphasis on risk management is required in order to deal with the immense construction pressure. “Insurers have the experience and risk appetite to take on increased exposures. But they want to work with companies that adopt a strong risk management culture.”
Levene joked that he had barely recognised the Doha skyline, with its soaring skyscrapers, when coming in to land and had wondered if he was on the right plane. His previous visit had been just 12 months earlier. “It’s great to see that Qatar is booming,” he said, “it’s very good news for the insurance industry.”
“Risk management must be at the heart of the economic strategy,” Levene concluded.