MILLIRE ENG2024

Global Reinsurance Market and Milli Re the oil prices have fluctuated throughout 2024 due to high geopolitical tensions in the region, divergent growth patterns of energy exporting and importing countries also known as “tale of two MENAs” have been observed again. Despite challenges such as instability and conflict, there is potential for prosperity. To boost growth, MENA can better allocate labor, leverage its location, promote innovation, close gender employment gaps, reduce public sector dominance, and improve trade and technology transfers. Countries in GCC are focusing on diversifying their economic activities away from oil dependency. As part of these efforts, there is growing emphasis on sectors like technology, tourism, and renewable energy, which could lead to more complex risk profiles and, consequently, higher demand for insurance products across these industries. In order to meet the demand, the insurance sector in MENA region is undergoing a digital transformation, with more companies adopting InsurTech solutions to enhance data privacy, customer experience, improve operational efficiency, and offer more personalized products. Artificial intelligence (AI) and data analytics are being leveraged to better assess risks and improve underwriting processes. Insurance will become more transparent, faster to purchase, hyper-personalized, better integrated with complementary products and services and streamlined for claims processing. The total gross written premiums in the GCC countries, which dominate the MENA region’s insurance market, are expected to reach around USD 30 billion in 2024. This is a continuation of a trend observed in recent years, with steady growth particularly in the health and life insurance segments. Health insurance in the GCC countries continues to drive a significant portion of the insurance premiums. Countries like the UAE and Saudi Arabia are expanding mandatory health insurance coverage, which is likely to push up overall GWPs. In 2024, this segment is projected to maintain a strong growth rate. The insurance sector in UAE demonstrated robust growth in the first nine months of 2024: Gross written premiums increased by 20.9 percent year over year to USD 13.8 billion. The industry maintained healthy capital adequacy with its strong capital structure and increased its return on average assets. Despite the positive outlook, particularly within North Africa, there are still some challenges such as low penetration of insurance products. For the entire MENA region (including North Africa), gross written premiums are projected to reach approximately USD 50 billion in 2024. This is based on projected growth trends across both life and non-life segments, particularly from emerging market like Egypt which is starting to show more promise in terms of a steady increase in its insurance penetration, driven by a growing middle class. Morocco is one of the more mature markets in North Africa, with both life and non-life segments growing steadily. Algeria is still in the early stages of developing its insurance market, with low penetration rates. In 2024, MENA saw a significant increase in both the frequency and severity of natural catastrophic events. The region endured record high economic and insured losses from storms and floods in both 11-13 February and 13‑17 April 2024. The heaviest rain fell on April 16 th as the UAE reported its most significant rain totals in at least 75 years of recordkeeping. Arabian Gulf Flash Floods in April 2024 caused 33 fatalities, USD 8.9 billion economic loss and USD 2.8 billion insured loss with particularly notable damage reported from Dubai, other parts of the UAE as well as Oman, Bahrain and other surrounding countries. Combined property and auto insured losses in the UAE alone were around USD 2.15 billion. The physical damage impacts were enhanced due to rapid urbanization which put a huge strain on local infrastructure unequipped to handle such large volume of water. The rainfall events had only a marginal impact on renewals at mid-year, but as the loss number matured, insurers have since reported significant loss development. Following these losses, for the 2025 renewals catastrophe reinsurance programs in the UAE underwent restructuring and measures have been taken to the loss hit programs. Upper layers of the excess-of-loss programs have adjusted to the region’s specific climate risks leading to a shift based on buying layers tied to particular perils. In cases where flood claims have been reported premium rates and deductibles have been increased, particularly for STFI (Storm, Tempest, Flood and Inundation) covers. Therefore, although it was limited compared to the global markets, the hardening was also felt in the region. Cedants become more selective towards new businesses, especially concerning risks with a history of flood claims. In order to enhance risk management, STFI and AOG (Acts of God) deductibles have been introduced to new businesses and even to risk-free programs; proceeding only when premium rates and AOG deductibles are sufficiently robust. And many infrastructure and power construction project opportunities have been declined due to exposure to recent flood events and NATCAT perils. Thus, there was no shortage in capacity and placement process was smooth thanks to implementations. For the rest of the Middle East, the renewal was generally stable and the reinsurance capacity in the region continues to be highly variable and dynamic. 66 MİLLİ RE