Major infrastructure developments in Dubai, such as the new Al-Maktoum International airport and the extension of Dubais metro network are all tapping the insurance market to cover the many risks involved in the construction of megaprojects.
There are so many mega-scale projects under way here and they all have insurance requirements, Umron Ahmed, CEO of global corporate, Middle East and Africa at Zurich Insurance Company, tells MEED.
Investment in the region is only set to grow in Dubai following the emirates successful bid to host the World Expo in 2020, while other GCC countries are also ramping up their infrastructure spend.
Not only are developers considering how to fund these large-scale developments, there are also growing concerns on how to manage risks and prevent projects running late and over budget.
The multibillion-dollar developments involve many companies and global supply chains that can be vulnerable to political and economic risks beyond the control of GCC-based developers.
Traditionally, the use of insurance has been low in the GCC compared with other regions, but Ahmed says the scale of forthcoming developments is making developers think more carefully about risk.
More and more companies in the region are enquirying about and buying products such as construction insurance, property insurance, professional indemnity and third-party liability.
We are on the cusp of rapid change in the region because of the nature of these projects, he says.
The size of the projects requires large panels of insurers putting together quite significant levels of capacity, ranging between $5bn and $20bn.
The GCC now has representatives from most of the major global insurance firms all vying for business, ensuring insurance rates remain relatively flat and unlikely to increase in the coming months.
Zurich saw double digit growth in the Middle East last year and is expecting stronger double digit growth this year.
The companys global corporate division saw gross underwritten premiums rise by 8 per cent to reach $9.3bn in 2013. Premium fees generated by international markets, which includes the Middle East, rose by 2 per cent to reach $5.7bn. Premium fees from the Middle East and Africa rose by 2 per cent on a local currency basis.