The influx of managing general agents (MGAs) to Dubai International Financial Centre over the past few years is supporting robust growth in the insurance and reinsurance sector, positioning Dubai as an emerging global hub.
MGAs are key to the insurance and reinsurance value chain, writing lines for risk insurance within the engineering, liability, marine, medical, personal accident, property and travel industries, and the mergers and acquisitions process. They tend to operate in niche and speciality lines of insurance and reinsurance.
MGAs in DIFC now account for 43% of the sector, according to figures released by DIFC in September. They have relocated from across the MEASA region, contributing $2.1bn to DIFC’s gross written premiums.
“MGAs are turning to financial centres like DIFC to better serve their existing clients,” says Salmaan Jaffery, chief business development officer at DIFC. “Dubai’s geography means that MGAs are conveniently located to hedge existing businesses they have from the same time zone. It also means that MGAs are finding access to new markets that they wish to penetrate and service.”
Other advantages to having a presence in DIFC include an increased ability to understand the local market dynamics, in turn enabling MGAs to provide tailored products and solutions in line with market demands, adds Jaffery.
“Additionally, there is a preference for an internationally benchmarked jurisdiction with straightforward laws and regulations and a robust regulatory framework, which is available in DIFC,” says Jaffery.
What is bringing MGAs to Dubai?
There are several factors driving this shift. The market’s preference for an enhanced client experience that fully considers the needs of the client and creates bespoke product offerings is a major underlying factor. There is also increasing demand for well-rated capacity alongside hardening rates in certain lines of business. Growing lists of government mandates in certain markets, like in the motor and health insurance industries, are further fuelling this demand, Jaffery explains.
Within DIFC, MGAs are finding a robust ecosystem of industry peers that follow the same regulatory regime, with whom they can collaborate or work with.
“One of the primary reasons MGAs are drawn to DIFC is that they can create partnerships with cedants and brokers that they wouldn’t be able to find outside this market,” says Jaffery.
A growing insurance and reinsurance sector
The growing MGA presence is part of a broader growth pattern in the insurance and reinsurance segment in DIFC.
For 2023, DIFC is on track to see 20% growth in the insurance and reinsurance sector, with gross written premiums up 18% in the first half of 2023 year-on-year.
DIFC is home to nearly 120 insurance and reinsurance-related companies, with MGAs such as Dual Corporate Risks, Mosaic Insurance Services (DIFC) and Optio Re MENA complementing established players such as AIG, Berkshire Hathaway and Zurich.
“The continuing increase in company registrations from the sector provides a buoyant outlook for workforce as well as gross written premiums,” a statement from DIFC says.
A survey conducted at the Dubai World Insurance Congress in 2023, with more than 1,100 industry professionals from 60 countries in attendance, found that 87% of respondents were confident in the MEASA market and the strategic opportunities it holds.
Property, health, energy, cyber and liability lines of business hold the most potential for the MEASA region, the survey found. In 2023, 85% of respondents said they are confident in renewals and their ability to retain clients.
According to the DIFC statement: “DIFC has built a globally recognised regulatory environment with strategic, financial, and operational benefits associated with geographical expansion for reinsurers, brokers, independent MGAs, and Lloyd’s service companies and cover holders. In addition, buoyant oil prices, increased infrastructure spending and low insurance penetration in the region have worked positively for the reinsurance market within DIFC.”
To learn more about how DIFC can help your MGA establish in Dubai, download the free brochure.