Bahrain: Insurance bond for property developers launched
Source: Middle East Insurance Review | Mar 2019
An insurance bond on escrow accounts for real-estate projects has been launched in Bahrain, and described as the first of its kind in the GCC.
The insurance bond is provided by local insurers who are regulated by the Central Bank of Bahrain (CBB) and members of the Bahrain Insurance Association (BIA) and fully supported by global reinsurance giant, Swiss Re.
“This insurance bond will bring about stronger buyer and investor protection, improved cashflow management for developers, increased availability of finance for developers and investors and greater efficiencies for a range of organisations, including RERA and insurance companies,” said Shaikh Salman Bin Abdulla Al-Khalifa, president of the Survey and Land Registration Bureau and chairman of the Real Estate Regulatory Authority (RERA), who announced the introduction of the new product in January.
Developers of off-plan real-estate sale projects will have to meet RERA regulatory requirements by either depositing funds in a specified development project escrow account, furnishing a bank guarantee, or an insurance bond.
BIA chairman Yahya Nooruddin said the association is optimistic that the insurance bond will lead to greater innovation in the real-estate sector. “It is a step forward in increasing financial resilience in this important sector of the Bahraini economy. We look forward to building on this successful collaboration and partnership over the coming years.”
Swiss Re conducted due diligence on the Bahraini real-estate sector and on RERA’s internal regulations before committing to providing the insurance bond for real-estate projects in the Bahraini market. M