Warren Buffett's Berkshire insurance unit may expand product offerings from Dubai
The company opened an office in Dubai in February to tap the region's expanding insurance sector
An insurance unit of billionaire investor Warren Buffett’s Berkshire Hathaway may offer more products to its clients from its office in Dubai as its remains bullish on the prospects of economic growth in regions from Middle East and North Africa to India, Turkey and CIS, a company official said.
The Berkshire Hathaway Specialty Insurance, based in the Dubai International Financial Centre, offers specialty and commercial insurance and reinsurance products with a focus on construction, energy, property, marine, casualty and executive and professional segments.
“We are already reviewing additional products. We might also offer group personal accident,” said Alessandro Cerase, senior executive officer for BHSI Middle East.
“Right now we are not considering entering the retail business but that does not mean we will not review our position if regulations change over the years. We might decide to expand in the local environment.”
The UAE's insurance market is growing, although over 60 insurers compete in a country with a population of some 9 million.
In 2017, the UAE's gross written premiums rose 12 per cent year-on-year to Dh44.8 billion, higher than 2016's 8.3 per cent expansion, according to figures from the Insurance Authority.
BHSI is part of Berkshire Hathaway’s National Indemnity group of insurance companies. BHSI was launched in 2013, when Mr Buffett announced the move into commercial insurance. The business was launched in the US with a mandate to build a global primary, property, casualty and specialty insurance portfolio. Today, BHSI has approximately 1,000-strong team in 30 offices across 14 countries.
“As we expanded our geographical footprint, Dubai was a natural fit for the Middle East region, considering the growth this part of the world has experienced in the last few years,” said Mr Cerase.
“The region has benefited over the years from investment that has been made in infrastructure and energy including power. The DIFC has a well-established and independent common law jurisdiction system that follows global best practices which is a big plus for us.”
The region’s insurance market offers various opportunities for insurers to grow, according to a report by Dubai-based Alpen Capital.
The Arabian Gulf’s insurance market is forecast to expand, with the compound annual growth rate increasing at a rate of 10.9 per cent to reached $44bn by 2021 from $26.2bn in 2016, according to the bank. Factors contributing to the growth include a rising population, expanding construction activity, mandatory lines of business and improving regulatory environment, according to the investment bank. Insurance penetration in the GCC as well is forecasted to expand from 1.9 per cent in 2016 to 2.5 per cent in 2021.
Despite this growth, challenges to the region’s insurance industry linger, including the lack of insolvency laws in some Mena countries and underestimation of disasters such as floods in some countries, said Mr Cerase.
“There is a bit of education that local companies need to consider,” he said. “Unless terms and conditions are tightened, we believe that the regional insurance industry will experience further challenges that will lead to the continuation of erosion of capital and also to further consolidation.”
Updated: December 25, 2018 05:31 PM