The London market is catering to a growing demand for specialist products in the Middle East, says Alan McGraw.
Massive development in Dubai and other parts of the Emirates has seen a large influx of capital and people into the area, particularly in the “free zones” where domestically registered foreign-owned businesses have imported their insurance standards with them.
It is the requirements of these incoming businesses, coupled with the recent introduction of new regulations, which have heightened demand for specialist lines. From a London wholesale perspective, the region has become an appealing area of opportunity. Most GCC countries have fairly strong domestic property & casualty markets reinsured directly with the major European reinsurers via the treaty departments, although little of this is placed in London.
Instead, London is becoming increasingly important in such lines as terrorism, taxi fleets, bankers' blanket bond, professional liability and malpractice. Local carriers have very little capacity to underwrite or retain these risks.As a result, some areas have undergone significant development, such as the private medical infrastructure, which has expanded to cater for the influx of IT, education, banking and stock-broking professionals.
Additionally, improvements in the legal system due to written regulatory and enforcement procedures have created other opportunities; the government of Dubai requires that corporate health providers must now show proof of malpractice insurance and, following the recent establishment of Dubai International Financial Centre, that all stockbrokers require professional indemnity cover to operate.
These developments are appealing to foreign insurers because the degree of regulation, control and professionalism has now reached global standards. Unlike a few years ago, underwriters can be reasonably confident that all parties understand the exposures as they would in other sophisticated economies.
London and European insurers and reinsurers are not the only interested parties. For a number of years India and Singapore have had a presence throughout the region on the ground and as pure reinsurance capacity (as well as supplying much of the domestic expertise), and other countries are gradually following suit.