The Middle East conflict is materially impacting insurers and reinsurers through heightened accumulation of risks, tighter war, and reduced reinsurance capacity, said J B Boda Group Chairman, Mr Atul Boda.
With the Middle East conflict in its fourth week, and with both sides not ready to blink, the insurance and reinsurance industry is facing a period of uncertainty. Mr Boda said that aviation, marine, energy, political risk, and trade credit lines are seeing sharp repricing, lower limits, and increased use of facultative and structured solutions.
Reinsurance industry on the edge
A protracted conflict would mean a potential increase in reinsurance costs for certain business lines. On the other hand, marine insurers and reinsurers have withdrawn coverage for vessels operating in the conflict zone, leading to increasing risk exposure for shipowners and charterers. India’s national reinsurer GIC Re has withdrawn marine hull war risk cover from the conflict zone.
Mr Boda said that reinsurers are reassessing retro capacity, aggregate exposures, and capital deployment. “For the global insurance and reinsurance community, the challenge is managing volatility, preserving capital adequacy, maintaining underwriting discipline, and delivering viable risk transfer solutions without eroding market confidence and sustainability in a prolonged geopolitical risk cycle with fluctuation in the economic conditions,” he said.
The J B Boda group, is an Indian multinational reinsurance broking house, and has a significant presence in the MENA region, with offices in Dubai, Egypt and Morocco.