Mr. Jamil R. Bahou, talks about CONNECT UW, the company he launched in London to serve the insurance sector across different countries and continents.
He also touches on other topics within the insurance sector, including the accounting standard, IFRS17, the new technologies and their invasion of the sector, and the price tightening and the acquisitions of some companies in the international market.
* What were the most important developments in the insurance and reinsurance world during 2019?
2019 and quite possibly 2020 will be market defining years in my view in the London marketplace. The market is contracting as (re)insurers withdraw from technically unprofitable lines of business, and insurance rates appear to be hardening as high as 50% in some classes and geographies. Reinsurance conditions are also tightening, and retro capacity becoming a channel for a number of markets in what is expected to be a challenging 12 months.
*The new accounting standard, IFRS 17, is facing the insurance sector globally and regionally…
– Are there any specific drawbacks and observations about this new standard?
In a challenging economic environment in certain regions, organizations will need to manage their receivables better to avoid unnecessary provisions against perfectly collectible overdue funds from clients.
As a company, we are ready to implement the IFRS 17 this year.
* Technology has strongly invaded the insurance world, as well as other service and production sectors.
– What are the new transformations that the technology brought into this sector?
Technology in our industry will revolutionze ultimately how non complex risks are distributed, underwritten, and processed. With time, brick and mortar distribution will see itself marginalized. This will take time, but it will come
On other fronts, advances in catastrophe risk modeling, data science, and AI will provide (re)insurers with better information and tools to make and adjust underwriting decisions.
* Can we say that the first signs of tightening in prices and conditions are approaching?
We are well past the first signs in my view. There certainly is a delay in the emerging market place as we wait for the treaty market to harden, but on business where facultative capacity is required, many will agree the hard market is now upon us.
* The Reinsurance markets are witnessing continuous mergers and acquisitions.
– What are reasons in your opinion?
The main drivers are an attempt to reduce acquisition/transactional costs of doing business. The last soft market resulted in an unsustainable underwriting environment. Consolidation as well as capital flight are primary drivers of what is occurring.
– And what are the implications?
The implications are less capacity, higher rates, more stringent terms, and return to greater emphasis on technicalities as opposed to volume underwriting.
* How do you assess the withdrawal of a number of reinsurance companies from the Arab region?
I don’t believe there is anything to truly assess. The different companies that withdrawn withdrew for different reasons. One thing is for certain, at least from our point of view, is that region specific pricing doesn’t work outside of NatCat and the legal environment.
* What is your assessment for the legal, legislative and regulatory situations of the insurance sector in the Arab region?
We don’t see them as being very different from other regions in the world.
* What are your company’s achievements in 2019 at all levels?
As a new market, there is nothing more we could have wished for to support our business plan. The hardening market and withdrawal/consolidation of the market has meant an early opportunity to show our distribution partners the value we are able to add to the programs of their clients.
We have also had access to an abundant amount of great talent, from which we are able to fill the roles we need to be filled in order to be a first-class underwriting partner for our brokers.
We are in no hurry to grow, or achieve topline quickly, and our priority is to stick very strictly to our underwriting strategy and safeguard the trust put in us by our reinsurers and the market.
