Across geographies, the financial sector is a significant contributor to any economy. Yet, financially engineered products carry inherent risks for financial institutions, such as credit risk, default risk and interest rate risk, among other risks, and especially those in the lending business.
One element of risk is the death or disability of the borrower. However, individual or group insurance mitigates such risk and benefits both the lender and the borrower. Group credit life products, and their design and administration, are the key to successful risk mitigation.
Group credit life insurance occupies a significant share of the life insurance segment in the Middle East, with estimated net reinsurance premium exceeding USD100 million in the two major markets: United Arab Emirates (UAE) and Saudi Arabia (KSA).
Group Credit Life Products from USD100 to USD10,000 or more
While there is a large number of credit card borrowers, the total and average outstanding amount is less in comparison to mortgages. Personal/car/small loans and medium-sized enterprise (SME) loans fall in between in terms of quantity and size. From the bank’s perspective, mortgage loans are secured (with collateral security of the property), unlike credit card loans, which are unlikely to be backed by collateral.Read More +