From Premium Magazine, April 2013 edition.
The recovery of the energy sector among states within the Gulf Cooperation Council (GCC) is resulting in a growing and increasingly wealthy population as well as a significantly more diverse economy. Not surprisingly, the region’s insurance industry is growing accordingly. An area economy that is currently worth well over USD 1 trillion dollars is expected to reach USD 2 trillion by 2020.
Lusail City campaign (the newest planned city in Qatar).
A swelling population across the GCC requires housing and transport. A USD 25 billion high-speed railway linking the association’s six member states is scheduled for completion in 2019. 2022 World Cup finals host, Qatar, plans to spend USD 140 billion on infrastructure projects by 2019. Each of these developments, and many more, require insurance.
Historically, insurance within the GCC region has been swept up by the London market and other foreign entities. This time, however, local insurance start-ups have a shot at a piece of the pie. To help keep money within the region, the GCC is stipulating that these projects and related businesses have a proportion of local shareholders.
For local insurers to succeed and operate alongside established, international players, the GCC insurance world has to get its house in order.
To be considered viable by energy industry giants such as Shell and BP, insurers must, among other things, make and maintain A ratings or higher from acknowledged rating companies such as Standard & Poor’s who review the monitoring of exposure accumulation.
Carriers’ need for clear insight into risk exposure aggregation is now.
Mass construction, expensive and potentially volatile energy plants, and natural catastrophes in this region all provide coverage opportunities for insurers. (GCC countries are among the most vulnerable to the affects recent sea level rises associated with climate change; Qatar, Bahrain and Kuwait in particular.)
Energy City Model, Qatar. First stage scheduled for completion in 2014.
A complete and clear understanding of the exposure represented by these elements is critical. Insurers cannot rely on catastrophe models alone to provide the level of information needed to control risk accumulation. They must maintain their own aggregate exposures using dedicated exposure aggregation software to validate and refine address data (geocode) and map the complexity of their policy structures so that all perils and lines of business can be successfully aggregated and managed together.
View the full article, here.