The UAE’s export credit agency Etihad Credit Insurance (ECI) has struck up a new partnership with insurance firm Markel International.
Under a memorandum of understanding, the parties have agreed to design and deliver bespoke conventional trade credit insurance solutions and services to UAE businesses, focusing on the growth of non-oil export trade.
ECI was established in 2015 by the UAE governments to support the export and re-export of UAE goods and services. Saed Al Awadi, chairman of ECI, says the agency is currently building “a comprehensive platform of partnerships” that can explore opportunities to support the UAE export community.
Just last month it partnered the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) to promote non-oil UAE trade through Islamic risk mitigation tools.
“The strategic association with Markel International will create a strong platform for ECI to boost UAE businesses in line with the UAE Vision 2021 agenda,” Al Awadi says, referring to the UAE’s national programme to diversify the country’s revenue sources away from oil.
Ewa Rose, managing director of Markel’s trade credit, political risk and surety division, says the agreement reflects the firm’s “eagerness to earmark our presence in the Middle East region, particularly in the UAE”.
“The UAE is currently the largest market for trade credit insurance in the Mena region,” she explains. “This has also been the strategic location where a majority of the credit insurers have their base and use it as a hub to support businesses in the region. The UAE offers a stable economic and political environment, ease of doing business, a relatively healthy regulatory and legal environment and geographical positioning, making it a trading hub for the region with access to quality talent.”
Headquartered in the UK, Markel International offers commercial insurance and reinsurance for businesses. It is among an increasing number of Lloyd’s of London underwriters looking to the Middle East for growth.
Speaking at an industry event late last year, Vincent Vandendael, Lloyd’s of London’s chief commercial officer, said he is seeing a “surging demand” for specialist insurance in the Middle East, driven by rapidly expanding economies, a complex regional geopolitical landscape, huge infrastructure investments and increasingly structured public-private initiatives.
“As the Middle East develops, there is a significant requirement for innovative insurance solutions to support economic growth. We see lines such as trade credit, political risk, public-private finance initiatives, warranties and indemnities and mining as a growth opportunity as the regional economies diversify and require increasingly sophisticated risk transfer mechanisms,” he noted.
He went on to say that in 2016, Lloyd’s of London paid a total of US$120mn in claims for losses arising from the UAE, which he said was “a clear demonstration of the value of insurance” in the region.
According to the Lloyd’s City Risk Index 2015-2025, the Middle East will generate US$2.4tn in GDP in the coming decade, of which 15% faces risks such as market crash, sovereign default, terrorism, power outages and cyber-attacks.