The Dubai International Financial Centre Authority has released a comprehensive
'Guide to Re-Insurance and Captives in the DIFC'. The publication is aimed at
supporting the insurance industry inside and outside the DIFC.
Titled, ‘Guide to Re-Insurance and Captives in the DIFC”, the publication
provides an overview of the core issues of interest to (re)insurers, brokers,
underwriting agencies, businesses considering establishing or managing a captive
insurer, insurance service providers and back-office support functions that
are looking at establishing a presence in the DIFC to carry out business across
the region.
Abdulla Al Awar, Chief Executive Officer of the DIFC Authority, said:
“The potential for the development of the insurance industry across the
DIFC region is huge. The historically low insurance penetration levels seen
from within the region are likely to grow exponentially over the next few years
to those experienced in more developed markets. The DIFC continues to receive
a great deal of attention from the global insurance industry who recognize the
promise shown by the centre to become a regional hub.”
“Keeping the rising growth and the vast potential in mind, the Guide
to Reinsurance and Captives in the DIFC has been prepared to not only assist
those who are interested in undertaking insurance business in or from the DIFC,
but it will also be of interest to those who provide support functions and services
to insurance businesses across the region,” Al Awar noted.
Wayne Jones, Partner and Head of Clyde & Co’s (re)insurance team
in the Middle East, pointed out that: “The publication arrives at a time
when many international insurers are looking to establish or consolidate a regional
footprint to concentrate on the opportunities presented in the Middle East.
“Our team has been involved with helping insurance interests accomplish
this by setting up in the DIFC since 2004. It has been a pleasure working with
DIFCA to produce what we hope will be a useful resource for the insurance industry,
and will continue to stimulate interest in the DIFC and the region generally,”
Jones added.
The DIFC Authority has been striving to increase awareness of modern methods
of finance and managing risk in the region, and part of its efforts are aimed at
bringing best practices, technologies and expertise to the region’s insurance
industry.
“Low penetration levels are attributable to a combination of factors,
with the main factor being a general lack of insurance awareness with regional
firms,” noted the DIFC’s statement.
“However, with economic development, growing industrialization, rapid
growth of international trade, international mergers and acquisitions, improved
regulation and increased focus on corporate governance, the region is witnessing
a change of attitudes towards corporate risk management, and a growing awareness
of the need for innovative ways to finance the future cost of corporate risk.”
“In view of the recent turbulent finance and insurance markets, volatile
premium fluctuations and reduced capacity, regional firms are now looking beyond
the traditional insurance markets and assessing alternative opportunities.”
“For regional firms looking to finance and manage corporate risk, the
DIFC's legislative framework, coupled with its favourable tax environment, offers
a convenient platform for the establishment of captive insurance companies.
Further, the flexible yet robust onshore regulatory environment of the DFSA
in their regulation of protected cell companies helps position the DIFC amongst
the most competitive domiciles,” it continued.
“On the other hand, because of the vast potential, global majors are
looking at the region, which has a huge programme of infrastructure spending
on energy, construction, water, transportation & logistics, trade, tourism,
and retail. There is a wave of privatization of state assets, resulting in previously
uninsured risks that now require insurance cover. There is also the introduction
of compulsory insurance covers and a generally increased insurance awareness.”
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