The classification of insurance companies strengthens their position in the market

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The classification of insurance companies strengthens their position in the market

Post  Admin on Sun May 27, 2018 4:12 pm

28/5/2018 12:00 am

 I started in 2016 to get it globally
Baghdad / Mustafa Al Hashemi

The insurance rating of Iraqi insurance companies is a new topic in the domestic insurance sector. Government insurance companies have been a pioneer in this field and since 2016 AM Best, one of the leading international companies in the world, The fact that these companies have a good rating - according to a specialist - will enhance their position in the Iraqi insurance market, while strengthening their value and their bargaining position with international reinsurers.


Private companies
Said that "the good classification will be one of the tools of marketing and win customers, and the degree of good rating is reassuring to the current insured on the The financial status of insurance companies and their ability to pay compensation claims, and encourages potential insurance claimants to make insurance with them. "
Iraq has received the first credit rating in its history in 2015, and the classification of "B" - issued by the rating agency Standard & Poor's (S & P), and some have considered this degree of classification with satisfaction, despite the circumstances experienced by Iraq, and the continuation The government's efforts to control the state budget, and the state does not stop paying its debts.
The credit rating of the country is taken into consideration when classifying insurance companies, in addition to other factors such as management eligibility, corporate financial statements and other classification criteria followed by rating companies.


Developed markets
"Classification has become a supply of labor in advanced markets and even in some Arab insurance markets (Egypt, Bahrain, UAE, Saudi Arabia). The high rating carries a reassuring message to the insured audience confirming the financial and credit standing of the insurance company" .
"Therefore, some insurance companies resort to obtaining a rating from two specialized companies not for the sake of fraud, but for the difference in the degree of classification between them and the criteria used in estimating the classification, and the impact on the position of the insured.


Audience and rating
Kamal said that "the credit rating of insurance companies will not affect the increase in demand for insurance because the vast majority of buyers of insurance protection in Iraq does not attach importance to the subject of classification, being absent in the decision to buy insurance," but this may change due to slow developments In the culture of insurance and personal and institutional investment and the entry of foreign entities to the stock market and banks.
He pointed out that "the foreign oil companies operating in the country know that the Iraqi insurance companies that deal with them do not have a credit classification, but ask and investigate the degree of classification reinsurers insurance companies of Iraq," stressing that "such a position can spread from the door of infection tradition, or The level of sophistication and sophistication among insurance applicants from the Iraqi departments and companies - the introduction of modern concepts in the decision-making process that have financial implications.


Government support
Kamal stressed that the tendency of the state and private insurance companies to obtain a credit rating is worthy of support as one of the expected effects is to alert these companies to their weaknesses and work to get rid of it, helping good companies to raise their level "likely" Iraq does not have sufficient financial resources to spend on the purchase of the rating, and therefore will remain without classification and lose its position in the domestic insurance market.
"International reinsurance companies prefer to deal with companies with a good degree of rating, companies that can not easily collapse and bankrupt, as the rating company performs the solvency function of insurers (their ability to repay)
Compensation ").
"It is not known if all Iraqi insurance companies are asking for the degree of classification of the insurance companies that provide them with protection, but I assume that the international insurance brokers of the Iraqi insurance companies are doing the job of ascertaining the acceptable rating of the reinsurance company."


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