Sezi Meriç

The Middle East region is still witnessing major changes at various environmental, geo-political and socio-economic levels affected by global conditions. This is what Mr. Sezi Meriç, the Regional Manager of the MENA region at Echo Re, pointed out, as he sheded light on the natural catastrophes that have begun to take a serious turn in the region, witnessing an increased frequency in the recent 12 months. He also underlined the importance of cyber insurance brosted by the increase of volume attacks, and the company’s seriousness in covering it.

Echo Re which has been celebrating in 2023 its 15th Anniversary of success, will persevere its mission for the next 15 years by supporting its clients and Keeping its commitment to its partners.

* What is your evaluation for the state of the reinsurance sector during the year 2023, on the local, regional and international levels?

The year 2023 has been globally influenced by the series of difficult years between 2017 and 2022 where natural catastrophes in many parts of the world negatively impacted the reinsurance industry. The pandemic and the increasing tensions in the global geopolitical situation added a further level of uncertainty. Consequently, reinsurance capacity has become tight for the underwriting year 2023 and terms and conditions hardened considerably on a worldwide scale. The NatCat activity during the year 2023 was marked yet again by numerous events, causing total insured losses to exceed the $100bn mark. Unfortunately, the Middle East region has also witnessed a number of natural catastrophes with much higher severity than in the previous years, such as the devastating earthquakes in Turkey & Syria and Morocco, severe Floods in Libya and even in the GCC that had experienced heavy rains, hail and other atmospheric disturbances. It is worthy to mention that some countries lack solid infrastructure to cope with these natural calamities. The most worrisome aspect is that not only does the frequency of these events increase, but also the severity as sadly experienced in 2023. That’s why the industry needs to work harder to introduce processes and protection schemes in order to minimize future losses.

On the other hand, it is evident that the reinsurance industry in the region is experiencing some changes after several years of soft and generous market conditions: terms have been changing in the last two years in different areas, such as the pricing adjustments of contracts, scopes of cover, contract certainty, balance and structures of reinsurance treaties. Having sort of neglected the implementation of adequate NatCat rates/pricing for many years, its importance and necessity has become sheer unavoidable. Hence, an increase in NatCat purchasing and prices as well as the emergence of new catastrophes arrangement and pools can be witnessed. The FSEC earthquake cover in Morocco is a good example: this parametric scheme gives the population that does not have access to insurance financial protection against the impact of natural catastrophes. This scheme fully paid out after the devastating earthquake in September 2023. The market is certainly on the right track, nevertheless, there are more steps and measures that need to be taken in my opinion. It’s not only about developing the insurance and re/insurance industry per se, but more importantly about supporting societies suffering from severe economic losses.

* Do non-traditional re/insurance lines like cyber insurance, natural disasters, global warming, … have become part of general re/insurance in the MENA region?

Even if NatCat exposures might still be considered rather benign in the MENA region (at least compared with other global markets), its increasing significance and destructive impact cannot be ruled out anymore. The topic of Cyber exists for many years now, however, despite an increasing number major cyber-attacks, companies in multiple industries are not really focusing much on buying cover for it and protecting themselves against potential incidences. Cyber insurance is going to be a dominant peril in the future due digitalization, multiple transformations, trends towards artificial intelligence and the shift from traditional to digital insurance sales. All these parameters bring with it serious threats which need to be mitigated, however the assessment of the exposure and aggregation of cyber risks is still rather difficult to quantify.

Unfortunately, insurance companies are still not putting the necessary weights on optimizing their cyber insurance purchasing, whilst other stakeholders in the industry are certainly building very good expertise in this area. As for reinsurers, there are many that have built specialist teams with cyber insurance capabilities, including Echo Re, which actively supports many its global clients in this area as well.

I believe, the human element in the insurance sector in general and in the reinsurance industry in particular will be challenged, however never be fully replaced by AI. Reinsurance is and will remain a “people’s business”. That said, the emergence and development of technology will certainly play a significant, yet indispensable role in fundamentally changing and challenging existing business models, distribution channels, and various other processes and services. We just need to know how to best utilize and implement these.

* What are your expectations for 2024’s renewals?

The overall trend is certainly expected to continue. However, the extent of the so-called hardening is what makes the difference: in the last two or three major renewals, significant changes have been implemented and certain adjustments will continue to take place, especially after the recent risk/cat losses and geo-political tensions in the region. That said, contrary to expectations, I believe the upcoming January renewals will end up being “flatter” than reinsurers would hope for.

* What about Echo Re’s achievements for the year 2023? What are your aspirations for the upcoming year?

Echo Re celebrated its 15th Anniversary in November 2023, supporting treaty clients and partners globally since 2008. The core of our strategy is to best diversify our portfolio from a geographical and line of business perspective. Together with a prudent retrocession policy that protects our capital, we build a profitable portfolio and increase the company’s resilience to absorb losses. Due to this company grew in terms of volume and profitability. This further allowed us further to strengthen the team in manpower which brought more experience and know how to Echo Re. As for the MENA region, Echo Re has been actively partnering with its clients for the past 13 years. We are committed to support our clients and partners and we intend to persevere our mission for many more “15 years” to come, not only in the MENA but in all our global regions and markets.

In 2023, Echo Re has had its best year in its 15-year history, in terms of production but more so in technical profitability. The company has been showing very healthy growth and results the past 4-5 years. The team grew substantially, both in quantity and quality, where we constantly work on enhancing our expertise and service levels. Finally, we have successfully expanded the number of products and services offered to our clients, increasingly focusing on offering expertise in specialty lines in addition to the traditional P&C business. We’re delighted to continue and further extend our collaboration with all our partners.