JEDDAH — As economies in the Middle East develop, the demand for more innovative and specialist insurance solutions in the region is growing, according to Lloyd’s, the world’s specialist insurance and reinsurance market.

A rapidly expanding economy, a complex regional geo political landscape, huge infrastructure investments, as well as increasingly structured public private initiatives are all behind the surging demand in the Middle East for greater specialist insurance cover.

These were some of the topics discussed at the second Middle East ‘Meet the Market’, organized by Lloyd’s. The recent event was attended by over 450 brokers, insurance companies and other representatives from the local, regional and international insurance and reinsurance markets.

Vincent Vandendael, Lloyd’s Chief Commercial Officer, said: “As the Middle East develops, there is a significant requirement for innovative insurance solutions to support economic growth. We see lines such as trade credit, political risk, public private finance initiatives, warranties and indemnities and mining as a growth opportunity as the regional economies diversify and require increasingly sophisticated risk transfer mechanisms.”

Renewable energy is another expanding class of business for Lloyd’s, said Vandendael, who added that Lloyd’s and the international market could bring significant expertise to bear in this area. Takaful reinsurance – a form of reinsurance that is compliant with Islamic or sharia law – is another growth area, he said. “We are looking at what more we can do to support the growth of this segment”.

Vandendael added: “Insurance plays a key role in supporting economic growth, and a clear demonstration of the value of insurance is in the payment of claims. In 2016 we’ve paid a total of $120m in claims for losses arising from the United Arab Emirates, but it’s not the value of the pay-outs that it’s important. Far more important is what this money is used for – to help communities, businesses and governments recover from disaster. At Lloyd’s we are proud of the contribution that we make to building greater resilience and speeding up recovery from catastrophes around the world.”

According to Lloyd’s City Risk Index 2015 - 2025, the Middle East region will generate $2.4 trillion in GDP in the coming decade, but 15 percent of this economic growth is at risk from 18 man-made threats such as a market crash, sovereign default, terrorism, power outages and cyber-attacks. Together, these account for $213 billion or approximately 58% of GDP at risk.

The shifting risk landscape in the Middle East requires insurers to be more innovative than ever.

Speaking at the event, Trevor Maynard, Head of Innovation at Lloyd’s, said: “We live in a world where mega trends such as globalization, urbanization and the digital revolution are changing the risk landscape. As a consequence, innovation in the insurance industry is essential.”

“At Lloyd’s we are working hard to create an environment in which innovation can flourish. We look ahead to anticipate new risks and new scenarios so the market can create solutions that will bring greater protection to our customers. This year we have already released a number of emerging risk reports, covering subjects such as liability exposure management, city resilience and a new earthquake model for the Middle East.”

“Lloyd’s has a long-standing history of innovation, and we continue to lead the way in this area by creating new types of insurance for cyber liabilities or threats arising from the new sharing economy.” — SG