The risks to the insurance market in Yemen have reached levels that threaten the survival of companies operating in the sector as a result of the ongoing conflict in the country that has affected economic and investment activities, said media reports.
Insurance experts have identified several major risks that may accelerate the collapse of this sector during the coming period, as insurers struggle to overcome obstacles without achieving positive results so far.
The foremost challenge is the cessation of business with most reinsurers. There are only three local companies, namely Yemeni, United, and Marib, dealing with international reinsurers, and the dealings are based on maintenance of old relationships, rather than their financial position or realised profits.
Industry expert Hamid Ishaq said top-rated global reinsurers refrain from engaging the Yemeni market, which has led local insurers to deal with reinsurers which have less stellar credit ratings.
In addition, competition in the Yemeni market is stiff because insurers operate in a very limited range. There are also problems related to documentary credits in Yemen as a result of the split in financial institutions between the two parties to the conflict. Traders have stopped opening credit with banks.
Mr Shahdi Al-Azazi, a director at United, the largest insurer in the Yemeni market, said the many difficulties facing insurers, notably the departure of major insurers, the increase in premiums, the reduction of coverage of risks, in addition to difficulties related to transferring financing dues.
The collapse of the Yemeni riyal has also greatly affected Yemeni insurance companies. Insurance expert Maher Abdel Aziz said the capital of insurers has decreased by more than half, and no solution has been given by the competent authorities, such as the Ministry of Industry and Trade and the Yemeni Insurance Federation or by companies.
Mr Abdel Aziz added that most insurers lack regulations for the risks related to their working capital, and there is no body that supervises or monitors the performance of insurers. The Yemeni Insurance Federation’s role is limited and ineffective, especially since the outbreak of the war.
The events that Yemen has witnessed since 2015 had negative effects on economic conditions, which are reflected negatively on insurance activity.
The insurance market in Yemen consists of 16 operating insurers. M