Read Full Magazine Here. The recent conflict in Israel has raised questions about its potential impact on insurance premiums, both locally and globally.
The war may lead to increased risks in shipping and trade routes, particularly in the Eastern Mediterranean
Insurers globally are bracing for the potential knock-on effects of the Israel-Hamas war. The recent conflict could trigger an increase in insurance premiums. Companies might reassess their risk profiles and adjust insurance premiums.
It’s crucial to understand that the insurance industry is intrinsically related to socio-political realities around the world. Hence, geopolitical disturbances like warfare can have consequential effects on insurance premiums.
Trust International Insurance Company (Trust- Palestine) is a public joint stock Company with a capital of 16,500,000 dollar, established by a group of Palestinian and Arab businessmen with distinguished and longstanding experience in the field of insurance throughout the Arab and international markets.
Trust Palestine, which expanded its activity to all over Palestine, began its first steps in 1994 and is a fellow member of Trust International Insurance Group for Insurance, one of the most important and largest insurance and reinsurance groups in the Middle East and the world.
Trust Palestine continues to provide the protection and security for the citizens’ properties, provide the country with qualified and talented cadres and experts, and contribute qualitatively in building the economy and achieving the promise to contribute in the construction and development wherever it exists and with all its capabilities
Trust has expanded its investments and activities in Palestine through various subsidiaries, which are: Smart Health for Health Insurance Services, Trust Real Estate, and Trust Tourism.
Anwar Shanti, CEO of Trust Insurance Group in Palestine- Board Member.
Anwar Shanti, the Chief Executive Officer of Trust International Group since 2010, is a distinguished leader with a wealth of experience in the insurance industry. Born in Qalqelia in 1960, he earned a Bachelor of Science degree from the Faculty of Science at the Jordanian University in 1985. Complementing his academic background, Al Shanti has pursued various courses at the Chartered Insurance Institute (CII).
In his capacity as CEO, Anwar Al-Shanti oversees the strategic direction and operations of Trust International Group’s insurance subsidiary in Palestine. He also holds key leadership roles as the General Director and Board Member of Trust Real Estate, Trust for Tourism and Travel, and Smart Health for Health Insurance Services.
Anwar Al-Shanti’s extensive industry involvement includes previous positions as the Chairman of the Board of Directors of the Palestinian Federation of Insurance, Board Member of the Palestinian Businessmen Association, and Board Member of the Palestinian Private Sector Coordinating Council. He has also contributed significantly to the insurance sector regionally, having served as a Board Member of the General Arab Federation for Insurance and as a member of its Executive Committee.
With a rich background encompassing leadership role in various organizations such as MENA JEOTHERMAL, Takaful Insurance Co., Jericho Mineral Water Company, and the Palestinian Road Accident Victims Compensation Fund ( PRAVCF ). His previous roles as the Regional Director of a Qatari insurance company in the UAE and as the Assistant General Director of Al-Ahlia Insurance Group underscore his versatile expertise and strategic acumen in the insurance domain.
In this exclusive cover interview, the distinguised Anwar Al-Shanti, Chief Executive Officer of Trust Insurance Group in Palestine- Board Member, shares his thoughts on how to scale in the insurance industry and what trends he has identified.
BL: How the ongoing revolutions and wars prevailing in the Arab region impact the world’s economy, the insurance sector?
Anwar Al-Shanti: The ongoing wars and revolutions in the Arab world have led to a pause in economic activity in many countries. The closure of borders in some countries has resulted in increasing the transportation costs. Specifically, during the Gaza war, economic activity significantly declined in Palestine due to many reasons such as; the closure of crossings, the deductions from government employees’ salaries, and Israeli government suspended over 100,000 permits for Palestinian laborers who work in the occupied territories in 1948 (what so called Israel), That has caused an economic disaster since those Laborers were bringing in a lot of cash. This situation has paralyzed the Palestinian economy, which is directly impacting the insurance sector by increasing bounced checks and causing workers, many segments of society to refrain from renewing insurance policies.
BL: What is the current situation and developments on the ground of Palestinians’ insurance companies?
Anwar Al-Shanti: In the past five years, there has been an annual increase of around 10% in the insurance portfolio in Palestine. The insurance portfolio reached $480 million in 2022. However, with the start of the war on Gaza in October 2023, it is expected to impact the premiums for the year 2023. Insurance companies disclosed their data in September 2023, showing a 3% increase in production compared to the previous year and net profits after taxes. However, we await the financial data for the year 2023 (including the fourth quarter) to see the impact of the war on the Palestinian insurance sector.
BL: How resilient is the Insurance and reinsurance market nowadays?
Anwar Al-Shanti: The global and regional market is very challenging, and the reinsurers currently have completely refrained from providing coverage or support to the Palestinian market. Some companies even have decisions from their governments not to deal with the Palestinian insurance market due to the current crisis. This situation increases the pressures and difficulties faced by Palestinian insurers in arranging insurance agreements, whether they are optional or mandatory.
BL: What are your comments on the sustainability and resilience of the Arab insurance sector and specifically in Palestine and the sultanate of Oman?
Anwar Al-Shanti: The sustainability of the insurance market in any country requires stability and a reasonable level of economic growth, as well as political calmness and the absence of political crises and conflicts. It also requires continuous search for sources of funding for projects that in turn lead to an increase in demand for insurance.
The Palestinian market is certainly different from the Omani market, The Palestinian market suffers from a weak economic situation, ongoing economic crisis, withholding of international aid and project financing, high taxes , border closures, difficulty in imports and exports. The Palestinian market relies on self-strength and national income, which depends on the economic activity of the Palestinian people and attempts to benefit from all available resources. Accordingly, the development is slow and limited at all levels, including insurance.
As for the Omani market, the Sultanate of Oman is a Gulf state with oil resources and other resources, supported by the Gulf Cooperation Council countries with a network of relationships and land, marine, and air routes, and a large and unlimited volume of trade between the Sultanate of Oman and neighboring countries and the world. This is generally reflected in the quality of a continuous, stable, advanced economy that is connected with a constantly stable political situation.
BL: What are the national and regional solutions for NAT CAT insurance? How does it affect the industry’s operations?
Anwar Al-Shanti: Climate change presents a major issue for the global insurance market today. The increase in natural Catastrophes like floods, fires, and earthquakes attributed to climate change has caused reinsurers to limit their capacity for insuring natural catastrophes (NAT CAT) during annual reinsurance renewals. This has resulted in reduced coverage limits on proportional treaties, higher prices on NAT CAT XOL agreements, and imposing stricter conditions.
The Arab region, like many other parts of the world, faces annual exposure to natural catastrophes such as earthquakes and floods. Recent events include the earthquake in Morocco and the flood in Libya. Moreover, Palestine is identified as a region at risk of earthquakes based on geographical studies.
Consequently, due to the rising frequency of natural disasters and their significant consequences on national productivity and economy, connected with reinsurers reducing their capacity to handle such disasters because of escalating losses, countries should emulate European and American nations by instituting programs to decrease the impact of natural disasters. By working on establishing state-supported pools in collaboration with insurance companies, these pools could also be transnational, involving a group of countries, to protect economies and minimize the impact of losses resulting from natural catastrophes.
BL: Will the war in Gaza result in higher insurance premium?
Anwar Al-Shanti: The war in Gaza Strip resulted in wide economic and infrastructural destruction, accompanied by severe humanitarian crises. This conflict had an exhaustive impact on the Palestinian economy in both the West Bank and Gaza which increase challenges caused by ongoing Israeli occupation.
The insurance sector plays a vital role as an important factor of the Palestinian economy and its function in protecting economy, the war significantly disrupted the insurance industry. This disruption causes a big losses and notable incidents related to political violence insurance and Strikes, Riots and Civil Commotion Clause (SRCC).
Moreover, a number of Reinsurance companies withdrew from the Palestinian market, encouraging the remaining entities to harden terms for policy renewals, exceptions, or reductions in SRCC limits, while excluding war coverage for marine transport. Consequently, insurance premiums experienced a significant increasing.
During the recent Gaza war, it is anticipated that there will be a rise in insurance premiums. The heightened tensions in the Red Sea area have resulted in a greater need for insurance policies covering war risks. Additionally, premium rates have increased due to rising of risks associated with kidnapping, detention, and piracy on ships.
BL: What are your challenges?
Anwar Al-Shanti: Trust International Insurance company is amongst the Insurance Sector of Palestine that face several challenges and obstacles. These challenges include the small size of the market and the limited involvement of various economic sectors in insurance. As well, the weakness of legislation that mandating insurance in Palestine (except some insurance programs), the politically unstable and fluctuating situation, Palestinian economic weakness, lack of national resources, insufficient funding and external support, as well as the absence of foreign investors due to occupation and its practices. all of these factors contribute to the obstacles faced by the company.
BL: How was the year 2023 in terms of financials?
Anwar Al-Shanti: During the year 2023, the Palestinian situation witnessed economic pressures, especially during the war in Gaza that affected all aspects of life in Palestine, particularly the insurance sector. the company managed to confront challenges due to its exceptional services to its customers, which led to maintain its market share and its top position in the Palestinian market, the company gained income from insurance premiums over $66 million and achieved post-tax profits of $2.4 million. It is worth mentioning that the company was able to present its financial statements in accordance with International Financial Reporting Standard 17 and disclose them to the financial market.
