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.
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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.
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 |
|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|
|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.
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Abu Dhabi National Takaful. (2014). 2014 Annual Report. Web.
Al Ain Ahlia. (2014). 2014 Annual Report. Web.
Al Dhafra Insurance. (2014). 2014 Financial Statement. Web.
Al Khazna Insurance. (2014). 2014 Financial Statement. Web.
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