With every passing day, Qatar’s construction boom is gathering pace. But is enough being done to cover the unnecessary costs involved in delay related to delivery of projects? In conversation with Mr. Prasad Aniyil, CEO, Marsh Qatar, Sinchita Mukherjee from ta’ameen Qatar learns about his observations of the market and the scope of Delay in Start-Up (DSU) insurance.
Please tell us about the history of Marsh Qatar.
Marsh Qatar started its operations in 2008, licensed by QFC, amongst the first insurance brokers. From a humble beginning, we have grown in strength, which was further augmented by our global acquisition of HSBC insurance brokers in 2010. We are thankful to the State of Qatar, QFC Authority and the QFC Regulatory Authority and most importantly to our expanding clientele for our success.
Have you always been a broker?
I started my broking career with Marsh in 2004 and have been a broker since then.
My career began with Oriental Insurance in India in 1987 as an underwriter. In 1995, I moved to Dubai to join Northern Assurance Co (Commercial Union). As I progressed in my career, I had an important stint in 2000 with Emirates National Oil Company as their risk manager till 2004. My exciting journey with Marsh started in Oman in 2004 and continues in Qatar since 2011.
Having such a multi-faceted experience, which role has been the most exciting? Personally, I find the role of a broker to be the most exciting as it offers the right platform for creativity in finding solutions for our clients. I derive a lot of satisfaction when novel ideas contribute towards resolving risk issues of the clients.
What values and vision do you personally bring to your role as the CEO of the company?
We want to offer the best possible value addition to all our clients in every transaction. We want to demonstrate that we deliver services in a very transparent and professional manner. Clients are at the core of our business philosophy. Whilst addressing our client’s requirements, we are committed to the development of the Qatar market.
How different is the Qatari insurance market from that of the other GCC states?
Qatar has predominantly been an ‘insurer-driven’ market. Clients were not appreciative of the need and value addition from brokers. In my opinion, more education is required to create the awareness of our role. Besides, Qatar is an evolving market with more brokers/insurers entering the fray and I am optimistic that increased competition will further enable the market to open up. QFC has been instrumental in attracting a number of financial institutions and insurance firms, which I feel is a progressive step.
There is a pricing war when it comes to structuring policies-especially in a competitive insurance market. What are the steps taken to strike a balance between growth and profitability?
Perhaps, this is a question better answered by risk carriers! There is intense competition as more capacity is chasing less business, which impacts price. This has led to a drop in premiums. It has been a soft market for the last many years since the financial crisis. In Qatar, this is further influenced by new entrants vying for market share. When they start dropping the ball, others in the business would also have to adapt to be in the game. The price thus falls further and leads to further competition. This trend is continuing; to service the capital, business is being written at lower prices.
As a broker, I’m happy that my clients are getting favourable premiums but as a professional, I feel the market should adjust to sustainable levels for everyone’s interest.
One would have to go ‘back to basics’ of prudent underwriting, rating models and come up with the right premium. People should expect the market to transition from under quoting to underwriting.
What is DSU insurance?
Delay in start-up (DSU) insurance is the consequential loss or advanced loss of profit associated with construction projects.
DSU is purchased by the project owners to cover loss of any anticipated profit resulting from unforeseen insurable losses under their construction policy. If there were a delay due to an accident, the project owner would incur potential loss of profit, part of which would have been available to repay the costs incurred in completing the project.
In my experience, I have seen DSU being purchased only when the project is financed by lenders (banks/financiers) as they mandate the project owner to purchase DSU.
What are the challenges of the market?
The market has many challenges namely – insurance awareness, risk appetite and being receptive to new products and solutions with an open mind. Capacities and technical expertise are two key areas, which are to be addressed, to retain higher risk premium, thereby creating more opportunities for all stakeholders to participate in the development of Qatar.
What values and vision do you personally bring to your role as the CEO of the company?
We want to offer the best possible value addition to all our clients in every transaction. We want to demonstrate that we deliver services in a very transparent and professional manner. Clients are at the core of our business philosophy. Whilst addressing our client’s requirements, we are committed to the development of the Qatar market.
How different is the Qatari insurance market from that of the other GCC states?
Qatar has predominantly been an ‘insurer-driven’ market. Clients were not appreciative of the need and value addition from brokers. In my opinion, more education is required to create the awareness of our role. Besides, Qatar is an evolving market with more brokers/insurers entering the fray and I am optimistic that increased competition will further enable the market to open up. QFC has been instrumental in attracting a number of financial institutions and insurance firms, which I feel is a progressive step.
What sort of due diligence do you perform when you partner with your clients in terms of their risk management protocols?
We follow strict internal guidelines when it comes to partnering with the insurers. Understanding their financial position, underwriting philosophy, reinsurance arrangements are some of the aspects we look at. When it comes to our clients, QFC has very strict Know Your Clients (KYC) guidelines, which we adhere to.
There is a pricing war when it comes to structuring policies-especially in a competitive insurance market. What are the steps taken to strike a balance between growth and profitability?
Perhaps, this is a question better answered by risk carriers! There is intense competition as more capacity is chasing less business, which impacts price. This has led to a drop in premiums. It has been a soft market for the last many years since the financial crisis. In Qatar, this is further influenced by new entrants vying for market share. When they start dropping the ball, others in the business would also have to adapt to be in the game. The price thus falls further and leads to further competition. This trend is continuing; to service the capital, business is being written at lower prices.
As a broker, I’m happy that my clients are getting favourable premiums but as a professional, I feel the market should adjust to sustainable levels for everyone’s interest.
One would have to go ‘back to basics’ of prudent underwriting, rating models and come up with the right premium. People should expect the market to transition from under quoting to underwriting.
What is your opinion about the National Vision 2030? How does Marsh align itself with the vision?
The FIFA World Cup 2022 is already aligned to the National Vision of 2030. Qatar wants to move ahead and create a modern infrastructure, establish robust educational and healthcare systems. A lot of progress in R&D is underway, which is supported by the Qatar Foundation. Qatar has ambitious plans and I believe it would provide opportunity for every business in Qatar.
What is DSU insurance?
Delay in start-up (DSU) insurance is the consequential loss or advanced loss of profit associated with construction projects.
DSU is purchased by the project owners to cover loss of any anticipated profit resulting from unforeseen insurable losses under their construction policy. If there were a delay due to an accident, the project owner would incur potential loss of profit, part of which would have been available to repay the costs incurred in completing the project.
In my experience, I have seen DSU being purchased only when the project is financed by lenders (banks/financiers) as they mandate the project owner to purchase DSU.
What are the challenges of the market?
The market has many challenges namely – insurance awareness, risk appetite and being receptive to new products and solutions with an open mind. Capacities and technical expertise are two key areas, which are to be addressed, to retain higher risk premium, thereby creating more opportunities for all stakeholders to participate in the development of Qatar.
Mega events such as hosting the 2022 FIFA World Cup typically require support from (re)insurers. Would staging the FIFA open door to more opportunities?
Market is anticipating more projects to be awarded and activities to gather momentum in 2013 relating to 2022 FIFA World Cup. Marsh has worked with Governments/organising bodies in similar mega events across the globe in the past. In line with our commitment to the State of Qatar, we have been meeting key stakeholders to share our experience, expertise and how we can partner in their success.
Which sector has been the most successful for Marsh?
We have been successful in the large corporate, SME and the employee benefits sector.
|
