The context of an insurer or reinsurer.

1. The context of an insurer or reinsurer.
2. The company introduced is GIG the largest insurance company in the GCC region.
3. The existing insurance product is motor insurance.
4. Emerging risk that affects this ensuring product.
5. Recommendations.
Gulf Insurance Group (GIG) will be used in this assignment, to discuss and analyze the emerging risk of one of its insurance products.

GIG is a large commercial insurance group in based Kuwait, it was founded in 1962, the first fully fledged insurance group to serve in the GCC region. Today it is one of the largest and most
diverse insurance groups in the Middle east and north Africa.

GIG operates on a diverse platform of insurance products such as; life & Health, property & Causality, Motor, takaful insurance (Islamic) and marine & aviation.

Motor insurance (Gold Car Policy Insurance) will be discussed in this assignment, to identify the emerging risks that could potentially affect this product.

GIG Gold car policy insurance, is a policy that will indemnify the insured vehicle in case of accidents or damages in any part of the car including the exterior, interior, mechanical parts,
electronic parts, windshield and tires.

The compensation will be in the form of either repairing the car with the original parts needed from the official car agencies in case of accidents resulting from; Overturning or Impact, inflaming
and explosions, and breaking & robbery.

Or, to cover the unknown accidents up to KD 750-.

There are various risk factors that might affect the motor insurance industry in the middle east, the following will be an explanation of a few that might affect GIG’s product performance and
Changes in Oil Prices:

After the fall of oil prices since 2014, reaching below 50$ a barrel, gasoline prices are considered at the lowest point since the financial crisis in 2008. This will affect the consumer’s ability
to afford vehicles with bigger engines that consume more petrol.

Based on a study by “AAA’s Foundation for Traffic Safety”, bigger cars cause more accidents (ABC News, 2016).

Big trucks and SUVs sales have been rising since the beginning of 2015, and because of the desert nature of the GCC countries climate, dusty roads, the habit of camping during the winter. Large
SUVs have always been always a popular choice in the GCC.
For instance, in the roads of UAE, between every five vehicles on the road, there is one SUV. As such UAE is considered one of the top countries in their dependence on SUVs. (gulf news, 2016).
Big trucks and SUVs needs an experienced driver to get passed the difficult driving conditions, if any problem occur, the large truck, and SUVs will leave bigger damage to itself and the
surrounding vehicles (ABC News, 2016).

When we look at some data of Kuwait demographics, the percentage of population aged between 25 – 54 is 52.32%. the majority of Kuwait population is considered in the youth segment, Additionally
Kuwait has one of the highest GDP per capita worldwide, this affects the consumer behavior of young Kuwaitis, increasing the sales of new cars to first time drivers. (CIA, 2016), (UNICEF, 2016).

New SUVs and big trucks are being sold to first time drivers who lacks experience in driving in the various conditions, this affects the number of insurance claims resulting from accidents.
Change in Climate:

Another fact than is considered a great risk on the Gold motor insurance plan is the changing climate of Kuwait.

Historically Kuwait always has very hot summers with cold dry winters, however in the recent years, Kuwait faced a significant increase in the level of rain in the winters, this changed the
structure of the asphalt which was originally combined to resist high temperatures during the summer and the minimal chances of rain every year.

The increase of rain levels resulted in deforming the asphalt on the roads, causing flying stones to damage thousands of insured cars windshields.

As the gold insurance policy stats, GIG is to replace the damaged windshield, this places a very high cost on each insurance policy, with the big wave of damages this could affect the profitability
of this product. (Kuwait Times, 2016).


The plan should be change in the following years to first the suv market.
2 limit the reoair of windhsiel to once or twice a year.

New vehicle sales
The auto industry continued its recovery with auto sales in 2014 continuing to climb over previous years. According to, sales were up 6% over 2013 and reached their highest number,
16.53 million, since 2009. Analysts are predicting a slight jump for 2015 to somewhere between 16.7 to 17 million.
The average price of a new car according to TrueCar was $33,168, costing consumers approximately $4,500 more than in 2004 because of the additional options included in vehicles such as navigation
and entertainment systems, multiple airbag protection systems, and improved technology like back-up cameras and touchscreens.
CCC says that sales of light trucks topped those of passenger cars for the first time in four years, and big pickups captured the top three model spots for the year. Crossovers and SUVs increased
in popularity, pushing sales up by almost 12%. And since profit margins for trucks are better than those for passenger cars, auto makers were more profitable.
Technology is also affecting how consumers shop for their vehicles. More shoppers are researching their next purchase on their mobile phones or tablets, while 82% still use a laptop or desktop

Auto repairs
All of these technological and safety improvements have affected how vehicles are repaired and it is a far more complex process than 10 years ago. The number of replacement parts required when a
vehicle is involved in an accident has increased, as has the repair cost.
“There has been more rapid change in frequency and severity of claims,” explained Gotsch. ”We’re seeing the impact of buying more cars and traveling more distances.”
CCC cites that for a model year 2003-2007 Honda Accord involved in a collision, the average number of replacement parts needed was 10, while a MY 2008-20012 required 11.6, and a 2013 model needed
12.5. The average cost of a repair was up approximately 8%, and the labor costs and refinish hours required increased as well. Gotsch cites the Ford F-150 as an example. “When it comes to the F-
150, repairers need special training and equipment to stay current. Customers who had an accident five years ago would have a very different experience today. Repairers have to decide how and when
they will make an investment to keep up with the changes.”

Business growth
Technology is also affecting how businesses grow and what will identify them as a leader going forward. As technology expands and allows consumers to operate in the digital space, insurers are
finding that they must adapt to these changes to meet customers’ growing expectations.
According to Strategy Meets Action’s (SMA) Deborah Smallwood, “…Many insurers have arrived at the inevitable conclusion that becoming a digital insurer is not only a necessary business imperative;
it is mandatory.”
Managing the claims process digitally from first notice of loss (FNOL) is becoming the norm as customers, particularly millennials, choose to interact with insurers through social media and
electronically by email and texts. Some insurers are developing processes that allow customers to use technology to capture the early stages of claims through video apps. This type of innovation
will be crucial to facilitating the process for claimants and meeting their increasingly high expectations. Insurers who listen to their customers will be better positioned to create the products
and services they want and need.


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