It happens every time. A major loss occurs and what do you know? Everybody blames the broker. Our apologies, the messenger.

This is an unusual market place we live in the Middle East. Largely unregulated, hugely fragmented, each market, underwriter, broker, and regulator each with their own agendas.

When competing for a piece of business, it’s a summon to War. Call the broker, send them the underwriting information, to the front lines! Cedants expect their support , they accept security from anywhere, and its champagne all around when an account is won.

Then the claim happens and everyone suddenly realizes that somewhere along the line, somebody has compromised on either the terms and conditions, the reinsurance security, or the accounting and admin.

The CEO’s panic, the GMs go frantic, and the underwriting departments descend into a state of disarray. Call the Broker! We want our money now! Oops, it looks like we are not going to get it!

Hold on, how did we accept security from Africa? Dodgy securities from Eastern Europe? Never mind, Mr. Broker now is the time to stand by your security.

Wait a minute, we didn’t pay the premium ?!

Never mind, call the Broker. If he wants our business, we want our money.

Time and time again, companies just don’t listen. Ladies and gentleman of the market, there is a reason most of the world buys reinsurance from rated and recognized global markets. That is because you pay for what you get!

This is not to say that there aren’t reliable unrated reinsurance markets out there. However, cedants must understand what bang they can expect for their buck before hand.

Talk to your broker, understand the facts. Understand the relationship history between your broker and the proposed markets. If the security is sitting in a country with indefinite political security, or a weak sovereign credit rating below B, chances are you are asking for cover. Ask your broker how they intend on recovering claims monies from these securities. What influence do they have over these organizations?

Next time you have a major claim which you have difficulty in recovering, shoot your staff department underwriter, not the messenger!