There has been much debate as to whether rating exercises undertaken by major rating agencies truly serve the general insurance market place, especially in the Middle East.

While adequate weight is given to the balance sheets and general financial strength of insurance and reinsurance companies, seldom do rating agencies assess the qualitative impact made by these underwriters in the markets in which they operate.

Clients in the Middle East continue to see time and time again rated insurers and reinsurers delaying payments to clients and cedants, making excuses, or looking for technical loopholes not to pay a claim. Whether driven by bureaucracy, inefficiency, profitability targets and bonuses or simply management philosophy, the rating of an underwriter can be the most misleading analysis of a company’s readiness to settle its obligations.

Rating agencies do a fabulous job keeping us informed on the financial strength and sustainability of the companies we work with and ratings are important whenever they are available. However, a crucial element that rating agencies do not incorporate in their ratings is ‘Customer Satisfaction’ a key indicator of a company's true worth.

Just because an underwriter is highly rated, does not necessarily mean they will pay your claim and the ratings reports do not reveal this significant point. There are dozens of companies not highly rated but who are responsive, prompt, and serious about meeting their obligations towards their clients.

In well regulated environments, the incidence of fraudulent default is far less. Accountability is mandatory, and markets such as Lloyd’s of London have taken the necessary steps to ensure that accountability is established.

This is something that is lacking in a large measure in the Middle East and it is imperative that every insurance company, broker, agent, and regulator get together to devise an independent system to rate the satisfaction of the insurance purchaser.

The problem lies with a select minority of underwriters mainly not based in the Middle East operating in the market. This is symptomatic of markets where you have a weak regulator or a fluid legal system. It would be sensible to check out the reputation and past performance of underwriters before you do business with them. Ferret out information about their reputations and track record of claims settled.

In conclusion, Ratings alone are not the Barometer to choose a Business Partner.

Market regulators and insurance associations in the Middle East must cooperate to devise a fool-proof system to establish the credibility of insurers and reinsurers operating in the region and discuss how to better protect market participants and customers alike.

‘‘The gloves must come off - We must all work together to safeguard the Market and the Credibility of our Profession.“