The political and social unrest in the Middle East and North Africa (MENA) region will affect the insurance industries of each country to varying degrees, though the projected negative impact on premiums overall in the region is not expected to be severe, a new special report from A.M. Best Co. finds.
A.M. Best has performed an analysis of the economic impact of the Arab Spring of 2011 on insurance companies, as well as the implications on country risk assessments and medium-term projections of premium growth. For the regional insurance industry, political unrest can have direct impacts, including the disruption of business activity, and possible liquidity issues. The protests in certain countries have changed the region’s landscape in terms of its business environment, as well as economic, political and financial system risks, which are the metrics A.M. Best uses to assess country risk.
Key findings of the analysis, which incorporates revised economic growth data from the International Monetary Fund, include:
Premiums for the region, as a whole, are projected to be only 0.7% lower in 2015 as a result of the protests than they would have been otherwise.
Ten of the 16 MENA countries are expected to experience lower premium growth than they otherwise would have before the protests, while five other MENA countries are projected to see modest increases.
Relative to country risk assessments, with the exception of Tunisia, all the countries where the impact from the unrest is deemed high were already classified by as CRT-5, A.M. Best’s highest risk tier.
To access this special report, please visit www.ambest.com/press/112801MiddleEastNorthAfricaIssueReview.pdf.