insurance risk management insurance requirements in the gcc by michael earp willis
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![Page 1: Insurance Risk Management Insurance Requirements in the GCC by Michael Earp WILLIS](https://reader036.vdocuments.us/reader036/viewer/2022071803/55cf998a550346d0339de6b7/html5/thumbnails/1.jpg)
Insurance Risk Management: Insurance Arrangements in the GCCMichael Earp – Willis Finex Global
October 2010
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Insurance Arrangements in the GCC
CONTENTS OF PRESENTATION
•Is insurance affecting procurement decisions?
•DIFC the new insurance hub for GCC
•Here come the claims - possibly?
•Saudi Arabia – can we learn from UAE?
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Is insurance affecting procurement decisions?
WHAT ARE THE ISSUES
• Insurance legislation
• Regional insurance industry
• Reliance on global insurance programmes
• Breadth of insurance cover
• Availability of (indemnity) limits
• Evidence of coverage
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Is insurance affecting procurement decisions?
INSURANCE LEGISLATION
• Aside from the mandatory insurances you are
not required to buy insurance
• Admitted - if you chose to purchase insurance
on assets or for liabilities in the country you
have to have local insurance
Prohibited
individual
life
insurance
excepted
Non-
Admitted
Prohibited
No
exceptions
Non-
Admitted
Prohibited
No
exceptions
Non
Admitted
Prohibited
Some
exceptions
Non
Admitted
Prohibited
Some
exceptions
Non-
Admitted
Prohibited
No
exceptions
OMANKUWAITKSAQATARBAHRAINUAE
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Is insurance affecting procurement decisions?
REGIONAL INSURANCE INDUSTRY
• A young industry
• Heavy reliance on reinsurance
• Esoteric cover difficult to obtain
• Global insurers moving into the region
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Is insurance affecting procurement decisions?
RELIANCE ON GLOBAL INSURANCE PROGRAMMES (1)
• Reliance on a worldwide programme with non
UAE insurers is not acceptable
• A temporary UAE visitor (guest appearances)
might argue that there was no breach of UAE
laws as the liability was not in the UAE
• There are no Insurance Policies registered in
any Free Zone in the UAE
• If you use any broker, irrespective of whether
they are licensed in the UAE or not, it would be
contrary to the legislation for them to sell or
broker a foreign insurance policy
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Is insurance affecting procurement decisions?
RELIANCE ON GLOBAL INSURANCE PROGRAMMES (2)
• If the policy arranged is not subject to UAE
jurisdiction no rights or remedies will be
available within the UAE
• It is important that consultants who come for a
few days have a legal working permit whether
a mission visa that is valid for 3-6 months or an
actual working visa rather than them working
with a tourist visa
• Not having a local policy can result in: Loss of
work; Withholding of fees; Fines or Penalties;
Loss of Visa
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Is insurance affecting procurement decisions?
BREADTH OF INSURANCE COVER
• Local policies typically very narrow, for
example:
– Financial and pecuniary Loss are often excluded or
cover is heavily qualified
– Only covers claims brought in the country
– High risk areas and prototype methods excluded
– Buildings not compliant with statutory building
regulations excluded
– Drawing not on time excluded
– Revising or redesigning costs excluded
– Design and build is not covered as in UK/USA
insurance policies
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Is insurance affecting procurement decisions?
AVAILABILITY OF (INDEMNITY) LIMITS
• Limits of liability capacity in local market for
liability cover relatively small but cost is low
• Higher limits (above USD1,000,000) normally
subject to facultative (specific) reinsurance
• “Any one claim” cover needs to be reinsured
back to London Insurance Market
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Is insurance affecting procurement decisions?
EVIDENCE OF COVERAGE
• “Fronting” of global policies frequently the best
policy (i.e. local policy is reinsured to global
insurers)
• “Fronting” is difficult where the global
indemnity limit is “in the aggregate” because
each reinsurance is a separate indemnity limit
• Beware broker letters
• Single Project Policies may have a role to play
• Consider evidence of cover for commercial
expediency rather than transfer of risk
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Insurance Arrangements in the GCC
CONTENTS OF PRESENTATION
•Is insurance affecting procurement decisions?
•DIFC the new insurance hub for GCC
•Here come the claims - possibly?
•Saudi Arabia – can we learn from UAE?
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DIFC the new insurance hub for GCC
• Western Insurers are using DIFC as a base for
their operations
• Insurance and reinsurance products available
• Market environment
• A new law regulating the Islamic insurance
industry was passed to provide more
transparency and oversight to the UAE takaful
market
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Insurance Arrangements in the GCC
CONTENTS OF PRESENTATION
•Is insurance affecting procurement decisions?
•DIFC the new insurance hub for GCC
•Here come the claims - possibly?
•Saudi Arabia – can we learn from UAE?
![Page 14: Insurance Risk Management Insurance Requirements in the GCC by Michael Earp WILLIS](https://reader036.vdocuments.us/reader036/viewer/2022071803/55cf998a550346d0339de6b7/html5/thumbnails/14.jpg)
Here come the claims -possibly?
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Insurance Arrangements in the GCC
CONTENTS OF PRESENTATION
•Is insurance affecting procurement decisions?
•DIFC the new insurance hub for GCC
•Here come the claims - possibly?
•Saudi Arabia – can we learn from UAE?
![Page 16: Insurance Risk Management Insurance Requirements in the GCC by Michael Earp WILLIS](https://reader036.vdocuments.us/reader036/viewer/2022071803/55cf998a550346d0339de6b7/html5/thumbnails/16.jpg)
Saudi Arabia – can we learn from UAE?
• In March 2010 the Saudi Arabian Monetary
Agency (SAMA) confirmed that the only
insurance and reinsurance companies now
operating in the country are those duly licensed
• All other companies have now left the market
• Insurers are likely to continue to depend
crucially on reinsurance
• The number of new insurance and/or
reinsurance companies to be licensed in the
market in the next three years is likely to be
modest
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Saudi Arabia – can we learn from UAE?
• Licensed insurance companies in Saudi Arabia
must retain at least 30% of gross premiums
(contributions), unless prior consent is obtained
from SAMA to retain less
• Fronting in the true sense of the word is not
allowed by SAMA
• Companies are being audited by SAMA and
insurers are worried about potential
ramifications