Dubai - Insurance companies in the Gulf Cooperation Council (GCC) have the potential to increase their profitability by 20 to 30 percent if they overcome the current challenges in underwriting, according to a report by management consultancy A.T. Kearney.
Managing underwriting is one of the key enablers for insurance companies in the GCC to improve their margins, A.T. Kearney said in a report.
In the United Arab Emirates, insurers cede more than 50 percent of their insured premiums to reinsurers with an obvious impact on their revenue, A.T. Kearney said.
International benchmarks show that reinsurance is only 5 to 15 percent for global leaders with state of the art in-house underwriting operations, it added.
"The companies that get underwriting right can, hence, look at exactly which segments require reinsurance and which are better kept within the company," A.T. Kearney said.
Automation of the underwriting process makes sense in the Middle East as it gives insurance companies the opportunity to acquire a very sophisticated set of technology that underpins modern protection products, A.T. Kearney said.
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