Dubai: Lloyds expects a growing penetration of insurance services across the Gulf and wider Middle East and North Africa (Mena) region, which could help boost growth by getting more managing agents on its platform, a senior official said.
The current penetration in the Gulf is about 1.6 per cent to the Gross Domestic Product (GDP) compared to 6 per cent on a global scale, Vincent Vandendael, director of international markets at Lloyds, told Gulf News.
In London, the reinsurer has 58 managing agents out of which nine — Amlin, Argo Re, Beazley, Catlin, Liberty, Markel, Talbot, Visionary and Watkins — are currently in Dubai.
“The GDP growth alone here is very healthy. There is a huge potential. The way to unlock this potential is to educate the industry, educating people,” said Vandendael. “The more this market place grows, the more there will be demand for insurance. There is going to be more interest from the remaining 49 managing agents.”
Vandendael said that as the middle class grows, the desire to protect their wealth will also rise, thus creating demand for more insurance.
“Singapore had only three Lloyds insurers about 12 years ago and it took them 12 years to bring that number up to 22. Here we have nine already, so that just [shows] how things have changed for Lloyds as well,” he said. “Many of the managing agents in Singapore have shown interest in joining the company’s Dubai operations.”
The reinsurer covers the marine, aviation, transport, construction and energy sectors. It plans to cover political violence, accident and health, trade credits and terrorism due to high demand from the local industry.
For example exporters to the United States could be provided with product liability insurance.
“We have an existing business here. Just in the GCC area, we have about half a billion dollars [Dh1.83 billion] of existing business and about $900 million when we look at broader Mena region. We are not starting from scratch,” he said.
The company had earlier considered opening office in 2007-08, but the plan was put on hold due to the financial crises. “We have a much clearer view of the world situation. Even though there are tensions, we are much more comfortable,” he said.
Transfer of risk
“If you are in a region with high [proportion of] national catastrophes [as in] the United States and China, we can see immediately what insurance can do,” he said.
Vandendael said insurance it can revive both businesses and the lives of individuals by transferring risk from a government’s balance sheet to an insurance firm’s balance sheet, allowing government to focus on what it does best.
“Insurance is about large numbers, if we have a large catastrophe in Japan it is unlikely that it would be co-related with an earthquake in the United States,” he said. “Having a widespread portfolio helps in such situations and a good spread of business can be supported by the balance sheet.”
Lloyd’s total premium volumes worldwide stand at an estimated $41 billion, with about 38 per cent of that being reinsurance while the rest is insurance.
Of the total, 43 per cent of its business comes from North America, 18 per cent comes from the United Kingdom, 15 per cent from continental Europe and the rest from Asia and Latin America.