The 2The 2ndnd International Istanbul Insurance International Istanbul Insurance ConferenceConference

Liability UnderwritingLiability Underwriting & & Claims in the MENA Claims in the MENA

MarketMarket

Lina HantasACE American Insurance CoRegional Casualty Manager - MENA

What is LiabilityWhat is Liability??

The state of being legally obliged to pay money to a Third Party .

The state of being legally obliged OR responsible for an act due to negligence

Gross liability (without the need to prove negligence)

 

Liability ProductsLiability Products

Casualty:

Public and Product Liability: covers any awards of damages given to a covers any awards of damages given to a member of the public/third party because of an injury or damage to their member of the public/third party because of an injury or damage to their property caused by the insured’s business activity or the insured’s productproperty caused by the insured’s business activity or the insured’s product

Workmen Compensation/ Employers Liability: claims that are claims that are made against an employer by an employee for an injury or illness/disease made against an employer by an employee for an injury or illness/disease arising out of and during their course of employment. Workmen arising out of and during their course of employment. Workmen Compensation limits are paid based on statutory law or the labour law. Compensation limits are paid based on statutory law or the labour law. Employers Liability needs to prove negligence of the employerEmployers Liability needs to prove negligence of the employer . .

Product Recall: is a request to return to the manufacturer a batch or an is a request to return to the manufacturer a batch or an entire production run of a product, usually due to the discovery of safety entire production run of a product, usually due to the discovery of safety issuesissues . .

Environmental Impairment Liability: Negligent acts and/or omissions Negligent acts and/or omissions by the individual and the organization resulting in damage to the by the individual and the organization resulting in damage to the environmentenvironment

Liability ProductsLiability Products

Financial Lines:

Professional Liability: also called Professional Indemnity also called Professional Indemnity Insurance, protects professional practitioners such as Insurance, protects professional practitioners such as Architects, Lawyers, physicians, against potential negligence Architects, Lawyers, physicians, against potential negligence claims made by their clientclaims made by their client

Directors’ and Officers’ Liability:: payable to the directors and payable to the directors and officers of a company, to cover damages or defense costs in officers of a company, to cover damages or defense costs in the event they suffer such losses as a result of a lawsuit for the event they suffer such losses as a result of a lawsuit for alleged wrongful acts while acting in their capacity as alleged wrongful acts while acting in their capacity as directors and officers for the organizationdirectors and officers for the organization

Bankers Blanket Bonds: Coverage for banks in the event of Coverage for banks in the event of loss due to dishonest acts of its employees or individuals loss due to dishonest acts of its employees or individuals external to the bankexternal to the bank

Underwriting FactorsUnderwriting Factors

Size of the business/ Turnover/ Revenues/ FinancialsSize of the business/ Turnover/ Revenues/ Financials

Number of LocationsNumber of Locations

Number of Employees/ WagesNumber of Employees/ Wages

Business OccupancyBusiness Occupancy

Limit of LiabilityLimit of Liability

Geographical/ Territorial limitsGeographical/ Territorial limits

Jurisdiction/ Legal factors & environmentJurisdiction/ Legal factors & environment

Trigger: Claims made/ Occurrence FormTrigger: Claims made/ Occurrence Form

Coverages (Primary/ Excess, DIC, DIL, etc.)Coverages (Primary/ Excess, DIC, DIL, etc.)

DeductibleDeductible

Liability OpportunitiesLiability Opportunities

The Liability market in the MENA region is still relatively under penetrated when compared to other markets. This creates high potential for growth.

Emerging Market with growing insurance awareness and still non litigious society.

Foreign investors, Lenders’ & Contractual requirements in Mega Infrastructure & Industrial projects and hence the request for high limits& wide Jurisdiction from rated companies.

Limited Capacity, financial rating and underwriting expertise of the Local & National companies.

Product exports to Europe, USA & Canada

Regional companies with cross boundaries expanding within and beyond MENA

Liability ChallengesLiability Challenges

Build, grow and maintain a profitable liability portfolio is a bigger challenge for insurers. The concept of exposure and liability being a long tail business is not well appreciated.

Increased court awards (i.e. Compensation under EL for certain sectors)

The best products and the best underwriting methodology for liability risks are no substitutes for adequate pricing

Premiums should reflect claims trend that will escalate and the uncertainties of a changing legal environment

Liability Claims in Liability Claims in MENAMENA

Liability Being a long- tail business (Asbestos Claims, Legionella Bacillus Claims)

Undefined exposures

Long claims process for Bodily Injury

Limited Data Extensive statistical work

Extensive Actuary work (Managed loss ratio, IBNR, Frequency/ Severity of claims)