Palmeraie Golf Palace, Marrakech, Morrocco

A look at some of the highlights of the recent General Arab Insurance Federation (GAIF) conference.

Reflecting the growing importance of the insurance industry within the Middle East economy, the 29th GAIF, held between 21-23 May in Marrakech, Kingdom of Morocco with coverage from Middle East Insurance Review, was perhaps aptly themed ‘Insurance and the Arab World Reform’.

This year, delegates included insurers, reinsurers, regulators, brokers, risk managers and other industry stakeholders from more than 60 countries. Some of the largest international delegations included the UK (the biggest outside of the Gulf), France, Switzerland, Germany and India.

As reported, numbers have grown by 12.5 percent to 1800 since the last GAIF, held in Jordan in 2010.

A burgeoning Middle East insurance market spawned many topics of discussion this year. On the one hand, a number of promising niche growth areas were identified. On the other were some of the challenges that come with growth – from the impact of the Arab Spring to issues of regulation, the need to manage risk or for more transparency and cooperation.

Statistics from the conference suggested that the Middle East insurance market grew by 8.07 percent in 2010 – far exceeding the world average of 2.87 percent - and there is plenty of room for more. At an estimated $21 billion in 2010 (up to $23 billion on 2011), the Middle East comprises just 0.5 percent of global market share, while much of the population remains severly uninsured. In GDP terms, the GAIF insurance market generates $1,658 billion – 2.63 percent of global GDP.

Walid Genadry/president, Arab Forum of Insurance Regulatory Commissions

Yet as Rana Tahboub, acting director general, Insurance Commission of Jordan, suggested at the conference, in the Middle East the industry will continue to become more dynamic in pitfalls as well as opportunities. “The global economic crisis and the political changes that some countries of the MENA region are witnessing today put us all, regulators and insurers, in front of a new phase that prompts us to reconsider our regulations/ business models and consolidate our efforts to deal with this critical stage for the benefit of the industry,” she said.

Equally, she emphasises, “Regulators should develop a conducive environment for insurers to enable them to assume a better role in providing social protection.”

Walid Genadry, president, Arab Forum of Insurance Regulatory Commissions, agrees:

“It is important to realise that in our rapidlydeveloping insurance sectors in the MENA region, the challenges are for both regulators and insurers. No success to insurers without proper governance, and no success to the sector without proper supervision.”

As crucial, feels Fatima Mohammed Ishaq Al Awadi, deputy director general, Insurance Authority UAE, is the need for the region’s insurance sector to increase its global reach. “Today, the Arab insurance industry needs an advanced strategy to be able to cross borders towards broader international horizons and become capable of speaking the language of global competition,” she was quoted as saying. “This means GAIF must focus on improving the Arab industry’s performance to support the Arab economic development process and contribute in strengthening its status globally.”

Another major source of discussion was risk management – particularly in the light of political unrest within the region and continued global economic uncertainty.

Fahad Al-Hesni/ CEO, Saudi Re as said to MEIR

Khaled Saoud Al-Hasan, CEO, Gulf Insurance Company Kuwait suggests this means increasing transparency amongst insurers. Sharing their own experiences would increase the overall understanding of the risks the industry faces and help guide pricing levels.

As Lamia Ben Mahmood, chairperson, Tunis Re added in the context of recent regional events: “Demand for political violence is on the increase, so we need to provide a level of coverage commensurate with this. We have to work on what are the acceptable risks along with the right pricing methodology.”

At the same time, political unrest has also brought fragmentation within the industry globally. “The Arab Spring was the most significant development in the Arab World in the past year,” comments Tayseer Treky, CEO, Oman Re. “It should revolutionise our attitude to cooperation at the regional level because some international reinsurers were not very sympathetic to the insurance markets which saw unrest events.”

One huge and largely untapped opportunity, believes Bachir Baddou, GM, Moroccan Insurance Federation, is life cover. “Expanding life insurance and savings is the future for (the) Arab insurance market, as there is a large uncovered population,” he says. “With lifestyles changing and modernising noticeably in MENA, these lines will have wide horizons, especially with Takaful giving a suitable means to overcome the religious barrier.”

Ali Ibrahim Al Abdul Ghani, GM, Qatar Islamic Insurance Company agrees that Islamic lines present a huge opportunity to growing insurance business as a whole.

“Family Takaful, including life, personal lines and most importantly savings for the coming generations, are going to yield considerable business in MENA markets in the future,”

he says. “Considering the peculiarity of this region, Takaful will be the means to increase the region’s insurance penetration.”

Other conference delegates had their own ideas on emerging areas of opportunity for the industry. In a region where smallto- medium sized enterprises comprise a significant portion of the economy – up to 80 percent or more in some cases – SMEs were perhaps astutely earmarked as one such area.

Another is health cover, the region’s fastest-growing sector at present – particularly in the GCC where there is a growing move towards healthcare cover for all citizens, by making it compulsory for companies to make a provision for their employees. Saudi Arabia and parts of the UAE have already initiated such measures, while countries such as Qatar and Oman are set to follow suit shortly (see our Sector Analysis article in this issue).

Highlighting yet more potential growth areas, “Engineering insurance could be one of the most promising lines in our region, especially with the infrastructure and reconstruction projects which are expected to continue expanding in the coming years,” feels Tarek Hayel Saeed, GM, United Insurance Company Yemen.

“There is great untapped potential in the liability side of business in the MENA region, and it is expected to remain as one of the most profitable lines as it has limited risk exposure in our region,” adds Fahad Al-Hesni, CEO, Saudi Re. Certainly, as the region’s insurance sector continues to develop in tandem with Middle East economies, and as niche opportunities emerge, new situations also develop that promise to further increase industry dynamics into the future. As its growing attendance shows, GAIF will continue to provide a platform for those within the sector to network, discuss developments, share ideas and find innovative ways to meet some of the challenges they may face. Yet, as Idriss Azami Al Idrissi, minister delegate to the minister of economics and finance in charge of budget, Morocco, acknowledged, in terms of innovation, the Arab insurance sector still lags behind by international standards in many respects.

One route to changing this could be the steps toward reform the region has seen over past months. As Abdul Khaliq Rauf Khalil, secretary general for GAIF concludes: “With reforms come challenges, and we need to think out of the box.”