In the Middle East we are increasingly aware of situations where local practice and the expectations of the international market, or vice versa, do not match up. By way of example: local courts are expected to apply international wordings to local situations but seldom manage to do so; the international market expects risks to have been placed locally in accordance with international best practice, but does not realize some of the local practices are at odds with these expectations; and local regulators are perceived to operate from a platform that often seems to be intended to stifle growth of the global market.
So what can and ought the local market do about this? Here are a few suggestions:
- Make wordings relevant to the region. In a region which does not have a strong insurance lexicon, there is a good case for preparing wordings that are both fit for purpose and will be understood in a local context. These wordings will need to take into account the actual circumstances in which they are likely to be applied, and be tailored to respond accordingly.
- An explanatory ‘code’ that is endorsed and adopted by local market bodies to describe what particular wordings are intended to achieve and how they are intended to be applied, would be a very useful addition to the insurance landscape;
- Producing an agreed and understood basis on which insurance contracts are placed and co-ordinated through the various intermediaries involved would assist greatly with contract certainty. This is particularly the case on complex risks that are reinsured on a subscription basis. A Middle East ‘market slip’ would be a useful start.
With all the promise of growth to come in this market, it would be advantageous to those practicing in the market locally, as well as to those in the international markets who interact with the region, to spend some time looking to ensure that local practices are understood and match up to international expectations. This could become a useful first task for the soon to be established DIFC Insurance Association.