(MENAFN- Khaleej Times)Due to increasing regulatory requirements risk management oversight has surfaced prominently on the agenda of Saudi Arabia and UAE insurance companies boards the survey added.
Dubai — More than 40 per cent of insurance companies in the UAE and Saudi Arabia believe that there is a need to improve their overall risk management framework according to the Mena Insurance Enterprise Risk Management (ERM) survey conducted by EY and Munich Re.
Due to increasing regulatory requirements risk management oversight has surfaced prominently on the agenda of Saudi Arabia and UAE insurance companies’ boards the survey added.
Sanjay Jain director of Mena insurance advisory services at EY said: “The Mena insurance market is continuing to grow on the back of government-backed infrastructural spending large-scale developmental projects and compulsory insurance [motor and medical]. The regulatory landscape has recently undergone a major transformation led by the regulators in Saudi Arabia Qatar and the UAE. As a result of the changing market and regulatory landscape risk management is high on the agenda of Mena CEOs.”
“It is becoming increasingly important for the daily activities and long-term sustainability of insurance companies. However a considerable amount of work still remains to be done as 40 per cent of the respondents in the UAE and Saudi Arabia do not have a dedicated risk management department.”
Bernd Horsch senior manager of Munich Re Mena said: “Well-defined risk policies and procedures are an extremely important element of an effective ERM framework.
Four out of five of the survey respondents believe that they have an opportunity to improve their risk identification and assessment process which means there is a lot of room for improvement.”
The survey identifies the maturity of ERM practices in Saudi Arbia and the UAE insurance markets identify risk management challenges that insurance companies face and take a view on the evolving risk governance practices.
Andreas Pollmann client executive for the Mena at Munich Re said: “ERM is not just something that is nice to have. There is increased pressure from regulators and rating agencies as well as competitors. Insurance companies that move first to an improved model of managing their business and their capital resources economically will see the maximum benefit.”
The survey revealed that the basic building blocks of a risk management framework i.e. risk governance strategy and risk appetite continue to pose a major challenge for many insurers. Even if some of the insurers have established an enterprise-wide risk appetite many have not been able to effectively cascade it down to the operational level and embed it into their decision-making or insurance value chain.”
Dr Sandeep Srivastava partner at EY financial service risk management said: “While risk management is still perceived as a ‘tick-box’ exercise by some insurers a few insurers are already working toward converting it into a business enabler. This can be achieved by integrating risk management into the key business areas of capital management reinsurance strategy and risk-based underwriting.”
Saudi Arabian insurers rated “business taking ownership of risk” as the top challenge to strengthening the risk culture whereas UAE insurers rated “lack of a strong regulatory regime and competitive pressures” as the top challenges for them.
—
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.