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Barriers to business


Some Middle Eastern countries have trade barriers against U.S. insurance services, although U.S. trade officials say some of the barriers are legal.

This year, they identified several Middle Eastern countries with "significant" barriers that "restrict, prevent or impede" the ability of U.S. insurers and reinsurers to export services, according to the 2007 National Trade Estimate Report on Foreign Trade Barriers.

The report, however, generally did not distinguish between barriers to U.S. exports that are acceptable because they are consistent with existing international trade agreements and those that it considers inappropriate and "actionable" under U.S. trade law and through the World Trade Organization.

An exception is the Arab League Boycott of Israel on U.S. trade and investments in the Middle East and North Africa. "The United States continues to oppose the boycott and U.S. government officials have urged Arab League members to end its enforcement," the report said.

"While it remains a serious barrier for U.S. firms attempting to export from Israel to some countries in the region, the Arab boycott of Israel has virtually no effect on U.S. trade and investment in many other countries in the region," the report said. The Arab League consists of the Palestinian Authority and 22 countries.

The report is based on information compiled by the U.S. Department of Commerce and other federal departments and agencies. It also includes information submitted by U.S. embassies abroad and members of private sector trade advisory committees.

The report lists the following states as having foreign trade barriers:

  • Egypt: The Egyptian market remains small and underdeveloped due to many factors, including excessive premium taxes. The market remains dominated by the four state-owned insurance companies that controlled over 75% of the nonlife insurance market and 56.2% of the life insurance market in 2004.

    The Ministry of Investment commissioned an international consortium to restructure its four state-owned insurance companies, opening the way for their privatization, overseen by a consortium consisting of Paris-based BNP-Paribas, Egypt's Commercial International Bank and the U.S.-based consulting firms Milliman Inc. and Ernst & Young L.L.P. Senior insurance officials predicted that all four will be privatized, with the first occurring by mid-2007.

    Foreign firms may own up to 100% of Egyptian private insurance firms, although the market remains closed to foreign intermediaries. There are 11 private sector insurance companies, three of which are joint ventures with U.S. firms.

    The state-owned Egyptian Reinsurance Co. is the only registered reinsurer. Direct insurers were previously required to make compulsory cessions to Egypt Re, although that requirement has been progressively replaced by voluntary cessions. Since Egypt is a member of the African Union, direct insurers are also required to cede 5% of their reinsurance business to Africa Reinsurance Corp.

  • Saudi Arabia: The Saudi Arabian government has implemented a series of laws in recent years mandating certain types of insurance coverage, including auto.

    New mandatory health insurance requires employers to pay for insurance coverage for foreign workers and dependent family members. It will be enforced through a requirement that foreign workers show proof of medical insurance to receive or renew national identification cards.

    Insurers are required to be locally registered publicly owned firms and to operate on a cooperative or mutual basis. In 2005, a royal decree allowed foreign insurers to operate through direct branches, which are not subject to the requirements of public ownership and cooperative form, for a transitional period of three years pending issuance of regulations.

    Saudi Arabia committed during its WTO accession to permit insurance branching. To date, though, it has not issued regulations implementing their insurance branching commitment.

  • Qatar: The government amended its law in 2004 to allow foreign investment in its insurance sector with approval by decree from the cabinet ministers. Foreign insurance companies are subject to the same laws that apply to foreign firms in all other sectors.

  • United Arab Emirates: About half of the current 47 insurance companies in the UAE are foreign-owned.

    The UAE government banned additional foreign insurance companies from opening after 1989 due to a perception that the market was saturated.

    UAE officials announced in 2004 that it would open its insurance sector to new foreign insurers and the UAE submitted a proposal in 2005 to the WTO to allow new foreign insurers to open a branch--not a subsidiary--in the country. Any new foreign insurers will be required to meet high international rating criteria and to offer new products.

    In 2006, new amendments required that established insurers, or those which shall be incorporated, must be a public company. At least 75% of the capital in such companies must be owned by the UAE nationals and the other 25% may be owned by a foreigner.