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Risk, Insurance, and Third-Party Administrators Report


Introduction

Risk and insurance are notions that are closely connected, and risks should be discussed in the context of the expected insurance that differs depending on the type of risk. These aspects need to be discussed in detail with the focus on insurance companies in the United Arab Emirates (UAE) and the Gulf Cooperation Council (GCC) countries. The purpose of this paper is to discuss the term ‘risk’ and associated insurances, focus on the concepts of the ‘third party administrator’ and ‘reinsurance,’ and report on the financial results of the major insurance companies operating in the UAE and GCC countries.

Risk and Mitigation with the Help of Insurance

A risk can be defined as a threat of negative circumstances for a person or business. In the context of personal life, risks are associated with the probability of injuries or traumas. In the context of business, risks are associated with the probability of financial or material loss for the company. Insurance is the provided financial protection that is aimed at mitigating risks and actual results of negative events with the focus on the financial compensation (Cummins & Santomero, 2012; Zietsch & Von Harpke, 2014). Thus, health risks are usually mitigated being covered by health insurance, and business risks can be addressed by a range of corporate insurance types.

Third-Party Administrators

The Third Party Administrator (TPA) is an organization that addresses the insurance claims and cooperates with insurance companies in order to administer the insurance cases effectively (Wollan & Brook, 2015). Thus, the TPA has a range of administrative responsibilities in order to guarantee that risk management is conducted appropriately, and insurance companies cover their obligations in a proper manner (Clarke, 2013). In the UAE, the functions of TPAs are performed by Next Care, NAS network companies (NAS Administration Services Ltd.), MSH International LLC, FMC Network UAE Management Consultancy, Inayah TPA LLC, and WapMed TPA Services LLC among others.

Risks Associated with Providing Passenger Boats Renting Services

There are many risks that are associated with providing boat services. The risks to the life of passengers are most typical, and the main way to mitigate them is to refer to the boat or airboat insurance provided by insurance companies in the context of additional programs. This type of insurance covers such risks as accidents, threats to life, and damages related to the property (Gorge, 2015). The health risks and accidents are also covered by third party liability insurance for passengers that guarantee the provision of financial assistance in cases of accidents that are not caused by the malfunctioning of the boat.

There are also risks associated with fishing and violation of safety rules (Borch, Sandmo, & Aase, 2014). These risks are not covered by insurance provided by the organization, but they are under consideration by the programs providing life and health insurance. If the fishing risks are not associated with the passengers’ violation of norms, such cases are covered by the specific fishing insurance provided by the organization.

Reinsurance and Selection of the Insurance Company

Reinsurance is a specific type of insurance acquired by an insurance company from any other company in order to resolve all possible problems associated with addressing the clients’ claims. Thus, using the reinsurance procedure, insurance companies share their obligations with other companies while reducing the risk of the finical loss (Cummins & Derrig, 2012). It is appropriate to choose those insurance companies that use reinsurance practice with the focus on the assistance of reputable and reliable companies with high financial and insurance rating.

Insurance Companies in the UAE and GCC Countries: Financial Information

Table 1. Financial Information for Insurance Companies and TPAs.

Insurance Company ADNIC Arab Orient Insurance (Next care) Abu Dhabi National Takaful Emirates Insurance (NAS network)
TPA (Yes or No) No No Yes No No Yes
Establish Year 1972 1996 1999 (Next Care, 2016) 2003 1982 2002 (NAS, 2016)
Insurance rating and the source a- (Business Wire, 2016) bbb+ (Business Wire, 2015a) N/A bbb+ (Business Wire, 2015c) a- (Business Wire, 2015b) N/A
Net Profit/Loss in 2013 AED 156,000,000 JD 4,108,479 N/A AED 35,755,627 AED 85,702,834 N/A
Net Profit/Loss in 2014 AED (280,000,000) (Abu Dhabi National Insurance Company, 2016) JD 5,027,365 (Arab Orient Insurance, 2016) N/A AED 35,173,681 (Abu Dhabi National Takaful, 2014) AED 103,371,490 (Emirates Insurance, 2014) N/A
Gross Premium Written 2013 AED 2,410,000,000 JD 86,019,536 N/A AED 235,124,382 AED 720,846,573 N/A
Gross Premium Written 2014 AED 2,630,000,000 JD 94,949,636 N/A AED
265,676,459
AED 840,072,954 N/A
Reinsurance ceded 2013 AED (956,328,000) JD (44,029,614) N/A AED (32,980,232) AED (366,693,238) N/A
Reinsurance ceded 2014 AED (1,048,350,000) JD (40,354,780) N/A AED (46,069,138) AED (408,810,910) N/A
Total claims collected from reinsurance 2013 AED (1,575,077,000) JD (61,633,012) N/A AED (59,463,382) AED (362,776,426) N/A
Total claims collected from reinsurance 2014 AED (2,706,559,000) JD (70,717,236) N/A AED (84,367,757) AED (384,617,259) N/A
Total commission from reinsurance 2013 AED (121,978,000) JD (8,005,650) N/A AED (65,751, 173) AED (57,170,129) N/A
Total commission from reinsurance 2014 AED (144,528,000) JD (9,722,612) N/A AED (74,933,879) AED (77,765,524) N/A
Gross premium Written minus (reinsurance ceded) 2013 AED 1,450,000,000 JD 41,989,922 N/A AED 202,144,150 AED 354,153,335 N/A
Gross premium Written minus (reinsurance ceded) 2014 AED 1,600,000, 000 JD 54,594,856 N/A AED 219,607,321 AED 431,262,044 N/A

Table 2. Financial Information for Insurance Companies.

Insurance Company Al Dhafra Insurance Al-Ain Ahlia Oman Insurance Co. Al Khazna Insurance
TPA (Yes or No) No No No No
Establish Year 1979 1975 1975 1996
Insurance rating and the source bbb (Reuters, 2015a) A3 (Moody’s Investors Service, 2015) a (Reuters, 2015b) b (Oxford Business Group, 2014)
Net Profit/Loss in 2013 AED 48,811,568 AED 42,177,000 (Al Ain Ahlia, 2014) AED 247,118,000 (Oman Insurance Co, 2014) AED (162,866,289)
Net Profit/Loss in 2014 AED 42,383,871 (Al Dhafra Insurance, 2014) AED 64,950,000 AED 229,371,000 AED (68,442,597) (Al Khazna Insurance, 2014)
Gross Premium Written 2013 AED 303,139,619 AED 516,529,000 AED 2,919,594,000 AED 95,417,609
Gross Premium Written 2014 AED 346,689,456 AED 600,135,000 AED 3,248,944,000 AED 127,927,415
Reinsurance ceded 2013 AED (117,193,116) AED (289,829,000) AED (1,471,496,000) AED (56,512,872)
Reinsurance ceded 2014 AED (119,652,377) AED (358,557,000) AED (1,670,261,000) AED (57,429,725)
Total claims collected from reinsurance 2013 AED (198,962,105) AED (218,146,000) AED (1,811,801,000) AED (42,545,932)
Total claims collected from reinsurance 2014 AED (189,498,921) AED (278,766,000) AED (1,923,813,000) AED (75,818,415)
Total commission from reinsurance 2013 AED (15,291,644) AED (37,798,000) AED (205,251,000) AED (2,476,222)
Total commission from reinsurance 2014 AED (19,673,400) AED (39,983,000) AED (362,898,000) AED (1,940,062)
Gross premium Written minus (reinsurance ceded) 2013 AED 185,946,503 AED 211,558,000 AED 1,448,098,000 AED 38,904,737
Gross premium Written minus (reinsurance ceded) 2014 AED 227,037,079 AED 208,321,000 AED 1,777,448,000 AED 70,497,690

Conclusion: The Best Insurance Companies

While referring to the results of the analysis of financial statements for several insurance companies popular in the GCC countries, it is possible to provide the list of the most successful and reputable organizations. According to the data of 2014, the most successful insurance companies are Emirates Insurance and Oman Insurance Co. It is important to note that ADNIC lost its positions in comparison with the year of 2013.

References

Abu Dhabi National Insurance Company. (2016). Annual reports. Web.

Abu Dhabi National Takaful. (2014). 2014 Annual Report. Web.

Al Ain Ahlia. (2014). . Web.

Al Dhafra Insurance. (2014). . Web.

Al Khazna Insurance. (2014). 2014 Financial Statement. Web.

Arab Orient Insurance. (2016). Financial results. Web.

Borch, K. H., Sandmo, A., & Aase, K. K. (2014). Economics of insurance. New York, NY: Elsevier.

Business Wire. (2015a). . Web.

Business Wire. (2015b). . Web.

Business Wire. (2015c). . Web.

Business Wire. (2016). . Web.

Clarke, M. A. (2013). The law of liability insurance. New York, NY: Taylor & Francis.

Cummins, D., & Derrig, R. A. (2012). Classical insurance solvency theory. New York, NY: Springer Science & Business Media.

Cummins, D., & Santomero, A. (2012). Changes in the life insurance industry: Efficiency, technology and risk management. New York, NY: Springer Science & Business Media.

Emirates Insurance. (2014). . Web.

Gorge, G. (2015). Insurance risk management and reinsurance. New York, NY: Taylor & Francis.

Moody’s Investors Service. (2015). . Web.

NAS. (2016). Claim processing. Web.

Next Care. (2016). Company profile. Web.

Oman Insurance Co. (2014). . Web.

Oxford Business Group. (2014). The report: Abu Dhabi 2014. Oxford, UK: Author.

Reuters. (2015a). A.M. Best Affirms Ratings of Al-Sagr National Insurance Company P.S.C. Web.

Reuters. (2015b). A.M. Best Affirms Ratings of Oman Insurance Company P.S.C. Web.

Wollan, E., & Brook, A. N. (2015). Business Insurance Law and Practice Guide. New York, NY: Taylor & Francis.

Zietsch, D., & Von Harpke, M. (2014). A reader in insurance and reinsurance metrics. New York, NY: Verlag Versicherungswirtsch.

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