Insurance companies that renew their reinsurance agreements in the current July season face continued strict conditions from reinsurers in light of the high losses in the medical and credit branches.
The general manager in charge of reinsurance at an insurance company told Al Mal News that the increase in compensation paid in the credit insurance branch has led to tighter renewal terms cited by reinsurers.
He added that there are not many reinsurance companies worldwide specializing in credit insurance and that this line needs underwriters with high experience.
He pointed out that credit insurance has become one of the leading branches in the market in terms of premiums, but the rate of losses has increased and it has become difficult to conclude credit reinsurance agreements on easier terms.
He praised the Financial Regulatory Authority which recently issued a decision to set a minimum rate for lending agencies to bear compensation of not less than 25% in the event of default by borrowers, in addition to obligating insurance companies to study well the risk and credit profile of the customer who has received loans.
He pointed out that the medical insurance branch had been severely hit by rising inflation. This has been reflected in the significant increase in the costs of medical treatment and the prices of medicines, supplies, tests, x-rays, hospital stays and surgery.
He stressed that these resulted in increases in the amounts of compensation in the medical insurance branch. In addition, some insurers reduce premiums to win group business. Reinsurers have intervened directly in the pricing of medical insurance policies in recent years.
He proposed that insurance companies should use third-party healthcare administration companies (TPAs) to help control costs and reduce misuse by customers of medical services.