The Israel-Palestine war threatens to impact surrounding countries including Lebanon, Syria and Egypt. Middle East Insurance Review spoke to (re)insurance leaders about the potential impact the war may have on the industry.
At the time of writing, it is too early to tell if the Israel-Palestine war that was declared on 8 October will have a significant impact on the insurance industry. Some ratings agencies we spoke to were not able to share thoughts on the war and said they would need more time to learn about impacts on insurers in the surrounding markets.
Harder reinsurance terms Speaking to Middle East Insurance Review
, Insurance Egyptian Federation of Egypt chairman Alaa El Zoheiry said that the insurance market has faced a lot of pressures from events in the last three years including COVID-19, Russia president Vladimir Putin’s invasion of Ukraine, unprecedented inflation ratios worldwide and political unrest in many countries.
“In addition to these issues climate change, earthquakes, floods and other natural hazards have contributed to the hardening of the reinsurance markets to the extent that all the major reinsurers have said it clearly during the Mount Carlo Rendezvous that the market will witness tough renewal negotiations and harder terms and conditions.
“If we add the war in Palestine now, I believe that the hardening of the market will continue not only this year but for many years to come,” said Mr El Zoheiry.
He said he expects that political violence (PV) terms and conditions in the region will be tougher and with less capacity available, especially for the war element within the PV cover.
He said rates for marine cargo in the region will be tougher following the Israel-Palestine war.
“I believe most reinsurance companies will decline providing war cover for this line of business in the hot area,” he said.
However, other insurance leaders played down the impact of the war on the reinsurance markets.
“I don’t think the MENA reinsurance markets will be greatly impacted, as far as increases or restrictions in coverage. War and similar perils are standard exclusion in all policies. Possibly, the immediate effect would be in marine and aviation which is already a specialist market demanding separate war rates,” said Trust Re group CEO Yassir Albaharna speaking to Middle East Insurance Review
Commercial Insurance assistant general manager Coralie Zaccar said that the war has not yet had a major impact on the insurance industry. However, she has already observed a spike in demand for certain products.
“Business is as usual and we have not heard of any negative attitude from the reinsurers. On the contrary, it is the time they visit the (Lebanon) market for the next renewal,” she said.
She said that the airports in Beirut have been operating normally with domestic and international flights.
Another concern faced by the country was the impact of border clashes with Israel on offshore drilling operations. She said the gas exploration vessel Transocean Barents is continuing its operations in Lebanon’s Block 9 in the southern region of the country.
“However, we have witnessed a significant increase in demand for political violence covers,” she said. M