Insurance in Iraq: Risk and Reward

AAIB Insurance Brokers (AAIB) has been operating in Iraq since 2005. We have offices throughout the country, including Kurdistan.

We are headquartered in Jordan. Our original aim was to use Amman as a hub for business originating in, or linked to Baghdad. However, early on we realised it was very important that we establish a local presence in Iraq as by being here, we can better support our clients and help to manage their insurance affairs. We stay abreast of regulatory changes, can facilitate claims management and liaise with loss adjusters and surveyors where necessary.

Iraq is a unique market from which AAIB has grown from small beginnings. The company started out insuring security companies and from there it has graduated to other sectors and now deals in a range of insurances including oil and gas, energy and cargo insurance as well as construction.

Iraq Risk for Foreign Companies

Iraq’s business environment can sometimes be considered to be difficult and confusing. A challenging and fluid security situation, Iraq’s frustrating government bureaucracy, its weak and underdeveloped banking and finance sector and its complex regulatory landscape are just some of the areas organisations find difficult to navigate when operating in Iraq.
What’s more the lack of relevant and reliable information can be a major challenge to doing business.

The process of entering the Iraq market is not easy. I advise caution, however the hurdles companies face should not put them off.

There is no question that the legal environment is a difficult area and at AAIB we have collected some of the most relevant laws to help our customers. Indeed, one of our most important jobs at the moment is advising international companies on who to work with, in Iraq and how to work with them.

With almost six years experience and knowledge of helping companies in Iraq, AAIB has noted some common misconceptions and mistakes when companies assess Iraq risk.

Iraq is a distinctive market and many international companies, even those with experience of operating in high risk or challenging locations, are not aware of the breadth of potential risks to be faced when carrying out operations in Iraq or how these risks can be categorised.

They do not fully appreciate when such risks attach to a project or the duration of the risks. They also have limited knowledge as to how insurance based solutions can be used within a holistic risk management plan, or how these solutions can be accessed.

AAIB’s approach is to work with companies to show how the mechanism of risk transfer, when used as a systematic step in the project management methodology used by companies operating in the Oil and Gas and other sectors, can assist them to better understand their risk potential, and so help to calibrate this and accommodate it with their risk appetite.

Solutions

In order to provide added security to its clients in Iraq, AAIB has been working closely with A-rated markets in the USA and Europe in developing specialist products and facilities, and additionally, in November 2010, it also entered into an exclusive agreement with Marsh concentrating on Iraqi energy, power and aviation business.

Our agreement with Marsh creates a distinct offering in this rapidly expanding market by using Marsh’s global strength and resources, coupled with our local knowledge and expertise.

AAIB is represented in Iraq via its subsidiary company, Al Fajer Insurance and Reinsurance Brokers, which is registered and licensed in Iraq by the insurance regulator, the Iraqi Insurance Diwan. The Iraqi Insurance Diwan oversees the insurance sector in accordance with the Insurance Business Regulation Act No. 10 of June 2005.

The Law meets international standards and its introduction brought greater transparency, oversight and security to the insurance industry. Whilst the Law does not specifically state that insurance must be purchased from locally licensed insurers, some observers feel that it will become mandatory under future legislation.

Our ethos, based on a deep insight and understanding of Iraq, means that we work on the basis that the local insurance market should be involved in providing insurance protection, support or assistance whenever possible. We have built up a network of important contacts within the Iraqi insurance community over the years. My colleagues and I at AAIB have met with people many times inside Iraq, and elsewhere to discuss various cases and issues.

AAIB’s ‘Iraq Registered’ status differentiates it from many other brokers. Unlike most other brokers, AAIB specialises in emerging markets, and in particular Iraq.

The real test of working in an emerging market like Iraq is not in finding clients, as there are plenty of them. Product development and unique service offerings are at the heart of our operation in Iraq.

As such, AAIB has developed insurance facilities and capabilities specifically for the Iraq market. These include the start-up of a medical and political evacuation business, AlfaEvac (AE), staffed around the clock by a multilingual team.

The founding of AE gives us and our clients the reassurance that our medical and political evacuation insurance works. From our operations room, we can co-ordinate an evacuation from anywhere in Iraq. We also arrange kidnap and ransom insurance, for which every policy has a named responder with proven Iraq experience.

We have invested time and effort researching both products and various companies in the value chain including claims handling and risk management companies, surveyors, loss adjusters and legal companies.