Negotiations currently underway between local insurance companies and global reinsurers are witnessing a tightening of terms in January 2021 reinsurance renewals.
Insurance executives told Emirates Today that global reinsurance companies have been greatly affected by the COVID-19 pandemic and want to compensate for their losses by raising prices, especially in sectors most directly affected by the pandemic.
Mr Muhammad Othman, chairman of the Non-Marine Insurance Committee of the Emirates Insurance Association, said that the global reinsurance institutions that local companies deal with must have high ratings. This means that the options for insurers in terms of the reinsurance companies they can turn to are limited.
Mr Bassam Chilmeran, CEO of Al-Wathba National Insurance, says that the COVID-19 pandemic has changed market data and put pressure on insurance premium rates.
Insurers though have some room for negotiation because they deal with more than one reinsurance company and pursue a policy of risk distribution. Insurers with good financial performance and strong capital enjoy a better negotiating position, and can succeed in arriving at satisfactory renewal terms.