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ACCESSING THE ANCHOR OF QATAR`S ECONOMY.. INSURANCE
June, 2014
 

Insurance is an anchor of stability for the economy for most emerging markets. To present a watchful eye on Qatar’s insurance industry, Sinchita Mukherjee from ta’ameen Qatar talks to Khalil Shams, Regional Manager and Chintan K. Barot, Country Manager of Takaful International on insurance industry trends, the local legal framework and client relationships. 

Please present a brief company profile of Takaful International. Looking at Qatar’s rising business optimism, do you seek to expand footprint? 


Chintan: Takaful International has been in operation since 2011 in the State of Qatar. Though we are a part of Takaful International Bahrain, we are independent in our approach towards underwriting, marketing and administrating our business. We believe that the market has tremendous potential and has a lot to offer. Considering the rising business optimism, we have set up our office here and going forward, are very optimistic about the future and look forward to demonstrate growth in our business volumes. We are servicing the market with the aim to serve the Nation. 

Khalil: As a part of the introduction, I would further like to add that we were the first established Islamic insurance company not only in Bahrain, but also across the GCC. The company was initially called Bahrain Islamic Insurance Company and later, the name was changed to Takaful International.

 

1) Khalil Shams, regional manager, Takaful International 


2) Chintan K. Barot, country manager, Takaful International 

 

How different is Qatar’s insurance market when compared to the rest of its GCC peers? 

Chintan: Every market is different and has its own dynamics. Talking specifically about Qatar, I have observed that there is a usual trend of companies showing preference to deal with nationalized insurance companies. I believe every market has its fair share of opportunities and challenges. 

There are a lot of SME segment companies, which offer equal opportunities to insurance companies like ours. Going forward, I am sure that there will be a shift in paradigm once the market opens up further. And, so would the approach towards new market entrants undergo transition. Insurance companies which are the best in terms of service will only stand the test of time. Right now, I would say that the market is a bit more controlled. 

How would you grade Qatar in terms of insurance regulation? 

Chintan: Undoubtedly, Qatar Financial Centre (QFC) has been instrumental in developing Qatar’s insurance sector. At the same time, there have been quite a few significant changes in insurance regulation in the recent past. It has paved way for the Qatar Central Bank (QCB) to act as a single financial regulator for Qatar’s insurance sector. Once there is clarity on who would be the final authority-whether it is the QFC or the QCB, there should be greater stability in the local regulatory framework. As of now, the QFC has been doing very well in terms of their services and guidances they provide. They have also assisted in positioning Qatar as a ‘robust’ financial hub and are bringing in new entrants on a regular basis. 

 

Khalil: Companies which are licensed under the QFC are very well controlled. The changes in the regulatory environment are expected to eventually result in boosting greater efficiency and standards throughout the insurance sector in the State of Qatar. Particularly in the sector, premium growth will depend to a large extent, on the evolution of insurance regulations. 

 

Please tell us about the day-to-day challenges that you face in the marketplace while promoting and selling insurance products. Considering insurance penetration is on the lower side in Qatar, what is the general approach of prospective consumers towards insurance? 

Khalil: Comparing Omani and Bahraini insurance markets to Qatar’s insurance market, following are the challenges which we face daily on an operational level. 

 

Proclivity towards dealing with localised insurance companies. 

Cut throat competition. 

Reduction of premium rates by established insurance players. 

 

Though Qatar is a big potential market, there seems to be an imbalance due to the above challenges. 

Chintan: Initially, it was an uphill task for us to introduce ourselves as a service provider in the market. Simultaneously, the QFC was still establishing its authority in the market. Commemorating our journey through the last three years, we are glad to state that, ‘Takaful International, Qatar’, has to a good extent succeeded in establishing a brand image in this challenging market. 

Talking about the existing monopoly in the Qatari insurance market, where do you feel has it affected the most? 

Khalil: I believe the monopoly is primarily experienced by companies which are not of Qatari origin. However, it is our duty to educate the market about insurance benefits and find ways to penetrate into the Qatari insurance market. 

 

Casting a spotlight on the SME sector, which companies would you like to target as your potential clients? Going forward, which are your best selling Takaful products? 

Chintan: The small to medium sized contracting companies are our potential targets. I believe opportunities are abound in this particular sector. 

After identifying the needs of the market, I would consider property and engineering lines to be our best selling products. We have been able to carve a niche’ in the insurance market for these products. 

Further, I suppose every company would be a bit cautious with writing motor and medical lines of business. For having a robust business model in emerging markets like that of Qatar, the rule of thumb is to be able to meet the requirements of technicality and profitability. 

Khalil: Under the SME sector, clinics and hospitals are also potential segments which we could tap into in order to promote selling insurance. Additionally, selling insurance policies for engineering lines is also a lucrative business in this market. After winning the right to host the 2022 FIFA World Cup, Qatar has fuelled a lot of investments in logistics and infrastructure which is definitely good news for us! 

 

How has the claims ratio been over the last three years of operation? How do you think the market would correct itself as it is currently going through a pricing war? 

Chintan: So far, our claims ratio has been excellent. We have done well since we purposely avoided entering into direct competition. In fact, we have supported the growth of the insurance market as we do not believe in undercutting rates and fuelling the price war. We want to maintain a healthy market which should in turn help us. 

Khalil: As an insurance company, we have to maintain our underwriting standards and our ratings in the market. This I believe is what most insurance companies should follow in order to support a healthy and conducive market. 

We always associate success with Takaful markets in South East Asia. How sophisticated and successful would Qatar be as a Takaful market in the next five years? 

Chintan: In Qatar, consumers definitely show preference towards purchasing Sharia’h compliant Takaful products. This surely acts as a catalyst to bring further growth in the Takaful market. For example, a lot of government-owned companies and private companies show preference towards buying Takaful products. Going forward, I hope we can create a ‘hub’ for Takaful products in the State of Qatar. 

What brings you to Multaqa 2014? What do you take back from the Multaqa? 

Khalil: The Multaqa serves as a big platform for insurance industry professionals to network not only with their GCC peers, but also with the Far West and East. We get to meet reinsurers and insurance intermediaries to promote our products and seek international partnerships to grow our footprint. It also helps us to enhance our existing business relationships and holistically strengthens Qatar’s economy further. 

 

Are your customers typically loyal? What needs to be done in that space to gain loyalty from customers? 

Khalil: Our strategy is to keep our customers happy. We deliver best possible solution for their cover requirements and reward our customers for the right risk management practices. We gain loyalty by providing quality service and maintaining close relationship with our customers. We hope to see the loyalty of our customers increasing in the near future. 

 

Are your retention levels high or low for different lines of business? Is there a particular Takaful product that you are currently improving? 

Chintan: Our retention levels have grown year on year and when it comes to different lines of business, our retention levels vary. 

We are currently catering to the corporate market segment and frankly, it is also our area of focus. We are investigating the market requirements to know what products need to be introduced or rolled out. So far, we have not identified any particular product. Having said that, I am sure we will undergo some product enhancements in the future. 

 

Does technology play an important role in buying/selling of insurance products? Please comment. Do you sell your policies online? 

Chintan: Definitely. We are gradually moving towards an era of an electronic world-eworld and insurance as a sector is no different. 

Khalil: Currently we are operating basis our corporate license. Once we obtain our retail license, we should be able to sell our policies online. Internet sales is definitely a growth area for the future. 

What are the most frequently asked questions enquired by Takaful product consumers? If you were a customer, what do you wish you knew about the Takaful business? 

Chintan: The main points of concern in this market are: 

Who you are regulated by, 

The performance of the company and whether there is any surplus distributed, 

The rating.

How do you overcome the hurdle of new clients not having history of their financial data or showing reluctance to share financial data? 

Khalil: I think there should be an increased level of cooperation between insurance companies. Certain insurance companies are a lot more open in this regard. They do not mind sharing history of financial data when requested by their clients. Undoubtedly, we find it challenging when a prospective client does not have the history of claims ratio. It is not because he does not have one-it is primarily because his current insurance company does not want to share it. But I guess the client has a legal right to have the information and hence data sharing between insurance companies should be encouraged by the regulators. 

 
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