In 2003, China and Hong Kong experienced a SARS pandemic; the first one in recorded history. This pneumonia-like disease began infecting people in China, Hong Kong and Vietnam; eventually spreading to 37 countries around the world. Especially scary was the virus’ quick rate of infection – in less than nine months, SARS managed to infect an estimated 8,000 people, leading to the deaths of nearly 800.
These frightening statistics give some clue as to why health officials in Saudi Arabia and surrounding countries are more than a little concerned that just this week, at least two more people have died from a SARS-like virus. This virus has been infecting citizens on the Arabian Peninsula since last year, but recently, deaths related to the virus have greatly increased – the World Health Organization reports a current death toll of eighteen. Read more
In many ways, the Middle East has become, and is becoming, one of the most exciting regions for economic and financial development.
Dubai is in position to not only have the world’s largest Ferris Wheel but also the world’s largest mall. In addition to large commercial attractions, Qatar will also be hosting the 2022 World Cup, another feather in the hat for the region that has seen marked instability during the last few years. However, one of the biggest indicators that show the region is in prime position for substantial growth can be found within the insurance industry, particularly in the health insurance sector.
The political struggles of Pakistan are well publicized: party offices under attack, pre-election bombings, and entire cities being shut down due to domestic terrorism. Unfortunately, it is politically unstable places like Pakistan that struggle the most in terms of health care, especially when it comes to children. This month, news network Al Jazeera has been running a story on the problems Pakistan faces with early childhood deaths from pneumonia and diarrhea. Read more
The Middle East continues to garner attention as one of the next frontiers for healthcare development, and with it the development of the health insurance industry. As more and more expatriates are relocated to the region, Middle Eastern countries are looking for ways to cope with the new demands that increased foreigners have created. Read more
When National Public Radio aired a program last year about violence and safety in Cairo, the broadcasters began with a story about a gym. This women’s fitness center, opened by Sally Salema in 2008, was immediately popular with Cairo women looking for a place to work out and keep healthy – women could come to the gym, stay fit, and not worry about being seen by men while not wearing a veil. However, since the 2011 toppling of ex- president Hosni Mubarak, crime in Cairo has risen, and Salema’s gym has barely managed to stay in business.
Salema’s story is an unfortunate example of how poor safety on the streets can lead to the problem of poor health long term. Read more
The first of Now Health International’s (NHI) twice-yearly premium adjustments was made on February 1 and saw relatively average increases of about 5% and 6% across most of the countries that the insurance company operates in.
However, there were a few countries, including Bahrain, Oman, Qatar and The United Arab Emirates, that saw increases as high as 8%. The second round of increases will take place in August, and, if medical inflation rates continue on a similar trajectory, the total annual increase for NHI’s premiums could reach up to 16%. This is a much higher figure than last year, which saw average rates of increases at about 10% and is also a much higher figure than the previous global rate of inflation for medical costs, also at 10%.
William Russell has announced a new campaign for 2013 that is designed to combat trends of excessive premium inflation in the UAE. The international insurance provider has decided to offer increased flexibility to its clients when they make a choice on their medical network options and prices. Cheaper provider networks will soon be available for clients who are looking for a chance to manage existing claims costs at their own discretion, and based on their needs or situation at the time.
Read the rest of the William Russell & Medical insurance UAE article
For those living in the Middle East, asthma and other respiratory problems continue to be a constant issue and topic of discussion. Statistics indicate that about 13% of adults and 25% of children in the United Arab Emirates suffer from a form of asthma. The World Asthma Foundation has released data suggesting that the number of people with asthma will increase by about 70% in the next 25 years in the region.
Some of the biggest factors contributing to these statistics are the annual sandstorms and the ongoing construction works taking place. The continuous construction in the area has created large amounts of dust and pollution in the air and PM10 levels, the measurement of small particles that can penetrate lungs and create respiratory problems, tend to be consistently high, often above the recommended level suggested by the World Health Organisation.
One of the signs that Dubai is continuing to show recovery after the 2008 Financial Crisis is through the growing health insurance industry. Many of the leading health insurance providers in the region are all reporting increasing numbers of insurance quotes and information requests from people interested in obtaining medical insurance.
Globalsurance continues to expand its services and operations in the region, attributing the influx to more and more inquiries from new clients and expatriates that are relocating to Dubai.
Tim Slee, Global Sales Director for Bupa International commented on this growth: “There is an exciting new level of increased activity across the Middle East, this increased interest has led to a strong conversion rate of international medical insurance sales in the UAE.” Bupa International has seen encouraging performances and maintains a strong presence in the region because of the diversified products they offer with their cooperation with Globalsurance.
In what began as a careful partnership, Globalsurance is working even more closely with Now Health, as the young health insurance company has shown promise, especially in regard to its strong organization, service and claims capabilities.
Now Health, which was only launched last year, is the creation of a management team comprised of former Good Health employees, including Martin Garcia, who served as Good Health’s managing director. When Good Health was bought by Aetna, there was a significant number of employees who left and followed Mr Garcia. The group, under Mr Garcia’s direction, aspired to develop a new international health insurance company. This goal was finally realized in April 2011.
Filed Under Aetna, Africa, Allianz, Asia, AXA PPP, BUPA, China, China insurance, DKV, Europe, Expat Insurance, Health Insurance, Hong Kong, IHI Bupa, Insurance Company, International Healthcare, Medical Insurance, Middle East, Philippines, UAE Insurance, United Kingdom | 9 Comments
In this article we will first present our findings of the premium increases and premium inflation rates in each region and country we studied, with specific insurance findings to be presented at the end. Overall our findings were that International Private Medical Insurance (iPMI) premium inflation was very high, at roughly 10.8 percent per year over a 5 year average. While variations exist between countries, the reality is that iPMI inflation rates were extremely consistent throughout the world. However, it is important to note that this is medical insurance premium inflation at the high end of the sector, and not necessarily with regards to the mass market.
Even presenting the argument that premium increases are fairly consistent on a global basis, there are some immediate outliers – Hong Kong, for example, runs at an iPMI premium inflation rate of roughly 13 percent per year, while Kenya’s premium inflation rate is approximately 9 percent per year. Although there is a difference in premium inflation rates between Hong Kong and Kenya, the difference is not overly substantial – as will be seen inside this report.
Globalsurance is pleased to reveal the results of our latest study on the international health insurance industry and rates of international medical insurance inflation around the world as of August 1st 2012.
Using 7,916 data points from 8 different International Private Medical Insurance providers in 10 different countries, Globalsurance has been able to successfully identify a number of trends within Global Medical Inflation for individual International Private Medical Insurance (iPMI) plans during the time period from 2008 to 2012. iPMI is a subsector of the greater health insurance industry which services the global population of expatriates and international High Net-Worth individuals.
The companies sampled in the studies use Age and Geographical Area of Coverage as the main variables in their premium calculations. By selecting a sample which is community rated Globalsurance has been able to efficiently identify the actual rates for premium increases in different parts of the world. Our measure of inflation is based on a sample of policies, ages, and published rates for each insurer included in the study. Globalsurance selected the most common age groups and most common policy types for our data points to achieve realistic measurements in relation to medical insurance premium inflation around the world.
While individual insurance providers and underwriters may disagree with our findings, the figures represented in this report are based on our sample and present baseline figures for all of the regions and companies we chose to consider.
It is important to note that, unlike the recent Towers Watson Report on Medical Trends, the data contained in the Globalsurance insurance review is not survey based. Rather than looking at individual responses and feelings in reference to levels of health insurance premium inflation, which may have some inherent bias dependent on the respondent, Globalsurance is analyzing the actual premium data from insurance companies with exposure to the world at large, over locally based providers operating in a single country.
Additionally, we have analyzed premium data, and not healthcare pricing data. Consequently the figures represented in this report are indicative of the levels of healthcare cost inflation which insurance perceive to be in place in the locations we sampled; profit and operating costs of the individual insurers are assumed to be unchanged. While the increase or decrease in premium values may point to actual rates of medical inflation in the countries which were included in the study they do, in fact, represent the increased costs placed on policyholders.
However, it should be noted that, while the figures contained in this report are the actual rates of iPMI premium increases for the duration of the study, the removal of Age and Policy type means that the figures presented in this study of International Medical Insurance premium inflation can be used as a suitable proxy for rates of actual medical inflation in relation to healthcare costs around the world. It should be noted that the proxy does not represent medical inflation across the entire healthcare sector within a country or region; for example, NHS cost increases in the United Kingdom are not evident in our findings. The rates of iPMI premium inflation are only a proxy for healthcare costs in High-End, private medical facilities in the countries which we considered, due to the basic nature of the international medical insurance products we are studying.
So, without any further ado, here is the Globalsurance International Insurance Review:
There have been a number of notable changes in International Private Medical Health Insurance in the last few weeks, while not as earth shattering as the Libor scandal or the crop failures in the US, the progressive and continual changes reveal an industry that is currently very dynamic and competitive. While Bupa is launching products to fill gaps it sees in the IPMI market, US healthcare giant UnitedHealth Group is steadily working to increase the scope and quality of their international healthcare cover. Medicare International has been tuning their products to keep them competitive, and have made efforts to keep premium increases down to a minimum.
Bupa, one of the world’s largest insurers, has recently announced a new range of international private medical insurance products called Bupa Flex. Until now, international health insurance policies were only available for a minimum of one year, but Bupa Flex aims to provide the benefits of traditional long term international medical cover without the usual 12 month minimum duration. It is aimed at international travellers and expats who are planning to be abroad for a period of between 3 to 11 months. Now, people moving abroad for short term transfers can tailor the duration of their policy to their exact needs. It offers benefits above short term travel insurance because policyholders can increase the duration of their cover at any time, and even convert to long term health insurance without a loss of or break in cover.
An innovative aspect of Bupa Flex is that it is managed online. Bupa has created a secure online portal called Membersworld, through which subscribers can manage almost every aspect of their insurance cover. The portal allows clients to access their policy documentation, request pre-authorisation for planned treatments, submit claims and access live 24 hour webchat with experienced advisors. The service also uses email and SMS alerts to notify members of the status of their claims, or to alert them that there are documents online which require their attention.
Bupa Flex comes in two flavours; Bupa Flex and Bupa Flex Plus. The basic plan covers inpatient and day care treatment, local air and road ambulances costs, and outpatient surgical operations. Bupa Plus adds a full range of out-patient coverage as well. Because of the short term nature of the products, there are no options to add maternity, newborn care or cancer benefits. Both plans have a total limit of GBP1 million (USD 1.7 million) and do not offer cover in the United States.
NIB and Unitedhealthcare International Join Forces in Australia
NIB, Australia’s fifth largest health insurer, and UnitedHealthcare, based in Minnesota, have signed a strategic partnership whereby NIB will support UnitedHealthcare’s international health insurance members in Australia. The deal gives UnitedHealthcare International customers access to NIB’s network of healthcare providers in Australia, which includes more than 500 hospitals. It extends UnitedHealthcare’s customers direct settlement options at a wider range of healthcare facilities in Australia, like dentists and opticians.
UnitedHealthcare sells international expat medical insurance, under their Global Solutions brand, to employers with employees based internationally. “UnitedHealthcare International’s clients are benefiting from our expanding global health care network, providing their employees with seamless access to high quality health care. A growing number of our clients have operations in Australia, and they now will have access to top hospitals and care providers there,” said Simon Stevens, president of Global Health at the UnitedHealth Group.
The company recently set up a similar alliance with Dubai-based Al Sagr National Insurance Company, to expand their Global Solutions coverage to seven countries in the Middle East. Through this alliance, UnitedHealthcare members have access to local services in the Kingdom of Saudi Arabia, UAE, Jordan, Qatar, Oman, Bahrain, Lebanon and Kuwait.
NIB currently provide healthcare cover in Australia to about 20,000 international customers, and are aggressively working to position themselves for expansion into the international healthcare market. “We have a view that increasingly people will need global health insurance cover and that if we don’t have an involvement in this phenomenon we could be missing an enormous opportunity,” said Mark Fitzgibbon, CEO of NIB.
UnitedHealth Group serves 75 million people worldwide through its family of US and international health and well-being businesses and are the market leaders in supporting employers with international workforces.
While there is no reciprocal agreement in place for NIB customers in the USA, NIB may be hoping to expand their international healthcare coverage through partnerships of this kind.
Medicare improves international health cover
Medicare International has made a number of improvements to its international health insurance products.
Organ transplantation and HIV/AIDS benefits will now be included in their International and International Plus policies at no extra cost, with the transplantation benefit carrying a limit of USD 170,000 for the International, International Plus and Executive plans which rises to USD 340,000 with the Executive Plus plan. The HIV/AIDS benefit will be subject to a two year waiting period, and will have a lifetime limit of USD 17,000 across all plans.
Maternity and complicated or abnormal pregnancy cover available on the Executive and Executive Plus packages will no longer be subject to an excess of 20% and 30% respectively. and the 20% co-payment on newborn care has been scrapped. The reduction in out-of-pocket expenses may be a welcome change, as simplifying and streamlining the process at a stressful time may increase the perceived value to policyholders.
Claims are also no longer subject to a USD 5100 limit for group and individual claims, but claims are now fully recoverable and without any cap, subject to the policy limits of USD 1.7 million per annum.
Price rises for 2012 have also been well below the expected annual medical inflation rate of 12-14%, with an average increase of 8% for individual plans and just 5% for group policies. With the current state of the economy, it is a welcome change to see policies undergo significant improvement while still keeping premium increases in check.
The competitiveness of the International Health Insurance market, the rising demand and scope for growth into developing parts of the world, like East Asia, are keeping insurers on their toes. We can expect a continuing stream of innovative products and new solutions as insurers contend for market share.
The National Bank of Fujairah (NBF) and the Oman Insurance Company (OIC) have signed a lucrative strategic agreement that will pave the way for the bank to release a number of new insurance products in the near future.
The latest deal comes a month after Oman Insurance Company signed a similar agreement with another leading bank in the United Arab Emirates, Commercial Bank International. It comes as no surprise that OIC have signed two major deals that should offer its products to more customers in quick succession This is because at the beginning of the year OIC CEO, Patrcik Choffel, announced that the company would pursue a goal of offering their products to an even great number of people across the Middle East, exactly what these agreements have achieved.
Oman Insurance Company’s stature as one of the biggest and most stable insurance companies in the region was cemented after being rated ‘A’ by rating agency, AM Best and ‘BBB+’ by Standard and Poors. However, their main competitor, Gulf Insurance Company, was given two ‘A-’ ratings from both agencies, and was announced as the ‘Best Insurance Provide in the Middle East 2012′ meaning that for now at least, OIC remains the second biggest local insurer in the region.
OIC’s deal with the National Bank of Fujairah should see the bank offering customers new bancassurance general and life insurance products. According to Sharif Mohamed Rafei, the bank’s Head of Retail Banking, the products “will strengthen our [NBF] efforts to become a one-stop destination for our customers’ financial and security needs.” He went on to say that the new bancassurance products will be “convenient and competitive products to meet their [the customer's] needs.”
It’s a high profile merger in the UAE, not only because Oman Insurance a leading company in the region, but also NBF recently picked up awards for the Best Commercial Bank, Trade Finance and Treasury Management at this year’s Banker Middle East Industry Award.
The Middle East insurance sector is becoming an increasingly lucrative industry. As insurance penetration is estimated to be lower than 10 percent in the region, there is still a large segment of the local market which is not adequately being served – pointing to significant upside if OIC is able to capitalize on the existing coverage gap. A low level of penetration is part of the reason why teaming up with banks and expanding reach can be extremely beneficial for OIC and other Gulf insurers.
Speaking about the agreement, National Bank of Fuajirah’s CEO, Dane Cook, explained that the deal signified the banks desire to expand into new areas of banking products: “NBF has traditionally focused on its core strengths in corporate and commercial banking, trade finance and treasury, and we now see an opportunity to deepen our longstanding client relationships with a wider range of personal banking products.”
The insurance market in the UAE, where the deal will have the greatest impact, is expected to grow at a double digit rate from 2010 to 2015. As OIC are the biggest insurer in the country, they are expected to benefit greatly.
One area of rapid growth that will not benefit Oman Insurance Company is the huge expected increase in the number of people purchasing Takaful (Islamic Insurance) products. In the past, the UAE’s Takaful industry alone has experienced an astonishing 135% increase in growth. However, laws specifying that Takaful operators cannot also offer conventional insurance, lead OIC to opt out of offering Takaful products, as they would risk losing huge amounts of customers with conventional coverage.
Insurance Companies Mentioned
Oman Insurance Company
Oman Insurance Company was founded in 1975 and is one of the leading insurers in the Middle East. They specialize in a whole range of insurance products including life, health and small business insurance.
Gulf Insurance Company
Established in 1962, the Gulf Insurance Company is the largest insurance company in Kuwait, and one of the largest in the Middle East. GIC specialize in a variety of insurance products ranging from life and health to marine and aviation insurance.
Over the past year, the Middle East & North African (MENA) Region has experienced stable A.M. Best ratings for its insurers and reinsurers, as well as an increase in A.M. Best rated entities. This has been occurring against a tumultuous backdrop of political and public unrest, making the relative stability of the MENA market an achievement in its own right.
Although there has been a 3 percent drop in the number of financial strength rating (FSR) “A” (Excellent) companies, the overall ratings remain consistent.
Three companies to maintain an “A” rating, all based in the UAE, include Oman Insurance Company, Abu Dhabi National Insurance Company, and Arab Orient Insurance Company. Additionally, the number of A.M. Best rated companies in the MENA region has increased by 40 percent, from 25 insurers to 35 insurers. These ratings exhibit the resilience and untapped potential of the insurance market in the MENA region, specifically in the following countries: Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, Turkey, and the UAE.
More recently, A.M. Best’s Europe Rating Services Limited accredited the Gulf Insurance Company K.S.C. (GIC) (Kuwait) and it’s subsidiary, Gulf Life Insurance K.S.C. (GLIC) (Kuwait), with an issuer credit rating of “a-“ and an FSR of “A-“. These solid ratings are a result of GIC and GLIC’s respected profile in many MENA regions, risk-management, and profitability.
Through numerous acquisitions and subsidiaries, such as Bahrain Kuwait Insurance Company B.S.C., Arab Orient Insurance Company, Arab Misr Insurance Group S.A.E, and Dar Al Salaam Insurance Company, to name a few, GIC maintains a strongly supported presence in Bahrain, Jordan, Egypt, and Iraq, above Kuwait.
Furthermore, GIC’s underwriting profits (profits after deducting business and claims expenses) grew 15 percent from 2010 to 2011, totaling KD 9.8 million (USD 35.4 million).
Similar growth occurred in Lebanon with insurance premiums totaling US 317.6 million in the first quarter of 2012. This 4 percent increase is primarily due to expansion of the fire, life, and cargo businesses. The Association of Insurance Companies in Lebanon (AICL) reported a 14 percent increase in fire premiums, and an 11 percent increase in life and cargo premiums. During the first quarter, premiums were distributed as follows: medical insurance premiums at US 96.9 million (30.5 percent), life premiums at US 80.1 million (25.2 percent), motor premiums at US 75.7 million (23.8 percent), fire premiums at US 29.7 million (9.3 percent), workmen premiums at US 10.5 million (3.3 percent), and finally cargo premiums at US 8.8 million (2.8 percent). Insurers in Lebanon also dished out 11 percent more in benefits and claims to their clients during the first quarter.
The forward movement by insurers in the MENA is in part due to reconfigurations in risk management systems. GIC, for example, is part of a respectable group reinsurance program. The company holds most of its capital in equities, and acted to de-risk such investments through practice of new risk management principles, ultimately lowering its need for capital.
While over 90 percent of Qatari companies believe in the importance of risk management in management priorities, only half of these companies have the required resources to run risk management systems. This fact highlights one of the biggest obstructions for MENA insurers over the next year, and while Qatar may be the obvious example, risk management strategies across the region should be addressed in a consistent manner.
Back in Qatar, “risk confusion” and “lack of clear vision” are the biggest obstacles Qatari insurers encounter when dealing with risk management systems, according to a survey conducted by Ernst & Young in co-operation with Qatar Foundation (QF). It seems that most companies implement risk management systems because of regulatory compliance, rather than utilizing risk management as a means of improving the business itself.
The survey also included characteristics of ideal risk management: internal methods to communicate risk and identify risks relating to objectives, active Board involvement, and clear ownership of risk.
Among the events of the Arab Spring 2011 and global financial slowdown it is comforting to witness ratings for insurers, such as GIC, remain excellent on a consistent basis, and as number of A.M. Best rated entities in the MENA continues to grow there are signs that the Market has never been more prosperous. Better ratings for like insurers may be encouraged by improvements in primary financial measures, efficiency, and risk management. Downward movements in ratings could be caused by degradation of risk management systems from excessive expansion or of overall financial performance. Under current circumstances, the trends are promising as more insurers and reinsurers enter A.M. Best’s radar, and the more established companies improve their ratings.
Insurance Companies Mentioned
Gulf Insurance Company
Formed in 1962, Gulf Insurance Company K.S.C. (GIC) continues to provide a broad range of creative insurance solutions. GIC is a public shareholding company, and is the largest insurance company in Kuwait in terms of premiums, covering risks related to Motor, Marine & Aviation, Property & Casualty, and Life & Health insurance.
Oman Insurance Company
Oman Insurance Company (OIC) is based in Dubai, UAE, and one of the leading insurance companies in the Middle East. OIC was founded in 1975, and maintains and excellent FSR rating of “A” from A.M. Best. OIC provides coverage for Life, Health, Motor, and Personal Lines, as well as medium to large industrial and commercial enterprises.
Abu Dhabi National Insurance Company
Established in 1972, the Abu Dhabi National Insurance Company (ADNIC) is a public shareholding company based in Abu Dhabi. ADNIC has established itself as a leading and reliable provider products through its quality and affordability.
Malaysia, one of the world’s most populated Islamic Countries, is experiencing something of a renaissance on the insurance front. However, it’s not just any insurance products which are doing well in the country however, although the Malaysian insurance market is attracting large amounts of interest from some of the world’s largest insurance companies, but specifically Takaful Insurance which is thought to hold the key to the nation’s future development and expansion of the domestic insurance market.
According to Etiqa Insurance & Takaful, the insurance arm of Malaysia’s largest bank by assets, Malayan Banking Bhd, the Malaysian Takaful industry is expected to increase to a total value of RM 7.2 billion (US$ 2.2 billion) over the next three years. Malaysian Takaful insurance is currently valued at RM 4.2 Billion (US$ 1.3 Billion), having grown an approximate 27 percent from 2005 to 2010.
Etiqa’s Chief Commercial Officer Shahril Azuar Jimin, citing the low levels of insurance coverage and penetration rates across the Malaysian population, and specifically pointing to extremely low levels of uptake within the country’s Muslim community, was optimistic about the potential the country held for Takaful providers.
One of the key reasons why Mr. Jimin saw success for Malaysian Takaful Insurers over the next two to three years was due to ever increasingly sophisticated distribution methods. “Ten years ago, there were less than 100,000 agents for takaful, whereas conventional insurance had about 250,000,” he went on to state that Etiqa alone now has a distribution force of approximately 100,000 agents, vastly improving the company’s, and industry’s ability to improve on the currently low levels of coverage being purchased around the country.
At present, only 54 percent of Malaysians hold either a Life Insurance or Takaful Family Insurance product, with Takaful penetration standing at a slightly underwhelming 11 percent.
Mr. Jimin was speaking to reporters on the sidelines of the World Takaful Conference: Asia Leaders Summit (WTC:ALS), which opened on Wednesday June 13th in Kuala Lumpur. The conference has revealed that good times may be in store for Asian, and Global Takaful Insurers.
Global Takaful premium contributions in 2010 were up 19 percent from the previous year. While Malaysia and the rest of South East Asia may hold promise for Takaful Insurers down the road the region still lags behind the Middle East in terms of Takaful contributions, with the Gulf Cooperative Council member states holding the lion’s share of the market with premium contributions equal to US$ 5.68 billion; Asia, including Malaysia, saw total 2010 Takaful premium contributions valued at US$ 2 billion.
The largest single domestic market for Takaful products is, unsurprisingly, GCC country Saudi Arabia, with US$ 4.3 billion in Takaful contributions, the KSA represents more than 51.8 percent of the global Takaful industry.
With the ongoing emergence of previously under-developed and underserved markets in the forms of Indonesia, Bangladesh, and Pakistan, it is expected that the global Takaful Industry will post premium contributions in the region of US$ 12 billion by the end of 2012. There may, however, be a slight Takaful slowdown in some GCC nations – specifically the United Arab Emirates – where the market is mainly General Takaful Insurance products, with Family Takaful accounting for just five percent of the total volume in certain areas.
In fact, there was a general GCC Takaful slowdown in 2010 which went largely unnoticed. Growth in the GCC Takaful market was only 16 percent in 2010, significantly down from the annual growth rate of 41 percent recorded from 2005 – 2009. While this may be due to saturation of the market in certain GCC countries, and an already high uptake, some analysts have cited the installation of compulsory Takaful Medical Cover in Abu Dhabi and Dubai as possibly causing an artificial inflation in the GCC’s overall Takaful growth and are of the belief that current growth levels are more realistic; reflecting the actual market outside of government regulations and legislation.
However, even with the slowdown of growth in 2010, Takaful insurers remain optimistic but cautious. Mr. Jimin of Etiqa was bullish on the 5 year growth rate of Family Takaful products, expecting around 20 percent; which would see Family Takaful insurance outpace both General Takaful and Conventional life insurance in Malaysia. Mr. Jimin also highlighted the fact that there was a massive amount of expansion potential in the Malaysian Muslim Community stating that “The immediate market [for family Takaful], which is the Muslim community, is very much under-insured. We’re also seeing more acceptance from the non-Muslim market because of the equitable aspect that Takaful offers.” Non-Muslim uptake of General Takaful Insurance products was close to 40 percent in the country, with non-Muslim Family Takaful lagging at 25 percent uptake.
Although, it should be noted that it is not all roses and sunshine for Takaful. As is true in any industry, success breeds competition and it is this competition, in addition to a shortage of expertise in Takaful and ever evolving regulations for the industry which have been identified as the major risks for the market around the world. One WTC:ALS attendee was critical of new industry providers stating that the younger organizations attempting to crack the market and compete with more established organizations may not be making use of sustainable business strategies. Aggressive pricing is seen as a key factor putting pressure on overall Takaful profitability, and while there has been a shift towards tying down the tactics which will translate market potential into profitable growth, the fact that there is increasing competition on the back of the attractiveness of the product does mean that there are some minor doubts about the industry’s ability to continue on its current growth track.
Sun Life Assurance has formed a joint venture with PVI holdings in Vietnam, while Zurich Insurance Group is eyeing an entry into the highly profitable Saudi Arabia insurance market.
Zurich Insurance Group has had a stellar start to the year. The group has posted Q1 2012 net income at US$1.14 billion, significantly improved from the US$640 million that Zurich reported as net income in Q1 2011. Zurich’s business operating profit is also sharply up from the first quarter of 2011, where the organization reported US$854 million, reaching US$ 1.38 billion so far in 2012.
The company has attributed its accomplishments to the success which it has experienced in executing a globally based strategy; accessing developing economies and relatively underserved markets in order to capitalize on the opportunities these places represent. For example, Zurich has recently entered into a 10 year distribution partnership with HSBC in Gulf Cooperative Council (GCC) Countries, has obtained the relevant licenses for life insurance distribution and underwriting in Singapore, and acquired the life insurance arm of Latin American banking giant Santander.
However, keen to keep the momentum going, Zurich is also preparing to enter into talks with the Saudi Monetary Authority (SMA) in an attempt to enter the Kingdom’s life insurance sector.
The SMA, which approves licenses and takeovers for foreign companies to enter the Saudi insurance market, is not currently issuing licenses to new insurers. This means that Zurich would likely have to purchase an existing local provider and that provider’s existing Saudi insurance license. Whilst this may seem like a straight forward case of identifying, and then acquiring a company with the capability to significantly add value to the Zurich Group, a potential stumbling block exists in the fact that the SMA must approve all foreign company takeovers in the local market.
This is not deterring Zurich, which has been in talks for the last 18 months to identify a suitable candidate. Zurich’s interest in the country is understandable considering that the International Monetary Fund (IMF) expects the Saudi GDP to increase by an estimated 6 percent this year – primarily due to the rising prices of crude oil.
Geoff Riddell, Zurich Chairman for APAC and MENA, commented on the attractiveness of Saudi Arabia from the company’s perspective in the Gulf Times, stating “it’s wealthy, it’s got a huge population, there’s a massive planned infrastructure spend to try and create new cities and work for that large population… There’s zero penetration and there’s a huge upside.”
It seems as if the Middle East is going through something of a renaissance in the insurance market at the moment, with a number of GCC and MENA countries posting strong indications of growth for the coming year. In light of the uncertain economic conditions in the USA and Europe, the decision by Zurich to further attempt an entry into Saudi Arabia makes a large amount of sense.
On the other side of the world, Sun Life Financial Inc. subsidiary, Sun Life Assurance Co. of Canada, has signed a Joint Venture agreement with PVI Holdings in Vietnam to form PVI Sun Life Insurance Co. Ltd., or PVI Sun Life.
PVI Holdings is a Hanoi listed subsidiary of Petrovietnam, the state controlled Gas and Oil titan. PVI Holdings is the largest non-life insurer in Vietnam and generated a 25 percent increase in gross written premiums during 2011 for total premium revenues of US$ 202 million. The company currently holds 21.3 percent of the Vietnamese non-life market, positioning PVI to become a valuable partner to Sun Life in the country for many years down the road.
Because Sun Life deals with life insurance and PVI is a non-life insurer the decision by the two organizations to form a JV opens up significant avenues for both. In-line with PVI’s domestic development goals and expanding the Sun Life footprint in South East Asia, PVI Sun Life will be primarily focused on life insurance distribution in Vietnam.
Sun Life Assurance Co of Canada will own 49 percent of the new organization, with PVI Holdings owning a majority 51 percent. By utilizing PVI’s exceptional local knowledge and existing sales and distribution channels and leveraging Sun Life’s 150 year history of life insurance underwriting PVI Sun Life will be in a prime position to lead the market in one of Asia’s most undervalued yet vibrant economies; at present only 5 percent of the Vietnamese population holds some form of life insurance protection, a figure which PVI Sun Life will be keen to increase.
Sun Life has been present in the nearby Philippines since 1892, and will use its experience in that country to further the goals of the newly created organization. Similar to the Vietnamese market, Filipino Life Insurance products tend to be far more flexible than similar products available in countries like the USA or United Kingdom, and are priced to be more competitive in a region where the average monthly income is only US$ 185.
Sun Life Phillipines CEO, Rizalina Mantaring, was extremely bullish towards the partnership and the ability of the Filipino arm of Sun Life to have an impact on Vietnamese operations. Ms. Mantaring said “we are truly excited about this new partnership. The Philippine operations has been highly successful over its 117 years in the country, and we look forward to providing support to PVI Sun Life through the sharing of our experiences, capabilities, and know how with our counterparts.”
With both Zurich and Sun Life choosing to seek ever more countries in which to expand their respective operations this could be an indication that more major providers in the international market will follow close behind. With the levels of economic uncertainty currently being seen across the globe, specifically in “developed” countries, the less developed “developing” markets are starting to hold significant potential for insurers looking to boost their bottom line.
A recent study by the Qatar Financial Centre Authority, entitled the GCC (Gulf Cooperative Council) Insurance Barometer has revealed that prospects for the growth of the insurance industry in GCC countries are extremely bright. The GCC includes the nations of Bahrain, Saudi Arabia, Qatar, Oman, the UAE, and Kuwait.
The study conducted by the Qatari organization was conducted through a number of interviews with more than 20 senior executives of leading local and international insurance companies and was intended to gauge their forecasts for the relative health of the peninsula’s insurance market over the coming years.
Over 60 percent of the individuals and companies surveyed stated that they expect the insurance industry to grow over its current levels by 2015 – the GCC’s insurance market is currently valued at US$ 15 billion.
While the market is situated to lead GDP growth in the nations represented in the GCC, this should not be seen as an indication that higher premiums are over the horizon; more than 70 percent of respondents to the study stated that they believed the premiums associated with insurance products in the region, across all business lines, would remain relatively stable for the next 1-2 years.
An example of the dynamic growth currently being demonstrated across the Arabian Gulf can be seen in Bahrain’s insurance market.
In 2011 insurance sales contributed 8 percent of Bahrain’s GDP, up from a mere 3 percent in 2003. This massive upswing in the relative value of the Bahraini insurance market as part of the GDP follows on from increased local penetration for domestic insurance products which grew from 1.95 percent to 2.55 percent from 2002 to 2012.
On top of increased penetration levels the insurance industry of Bahrain, a country of only 1.2 million people according to the 2010 census, actually tripled in size between 2003 and 2012; the Bahraini insurance sector grew by a staggering 335 percent during that period.
The types of insurance products being purchased in Bahrain have also experienced a shift in the last decade, which may account for the increased levels of growth being demonstrated in the market. The sale of medical Insurance products grew by a staggering 1840 percent which may be due to the proposed legislation to mandate employer provided health coverage in the country; however, Marine and Aviation products saw a loss, shrinking by 13 percent during the same period.
The number of providers entering the Bahraini insurance market has grown in tandem with the industry’s overall growth levels.
In 1995 Bahrain had issued 109 insurance licenses, by 2010 this had jumped to 171; a massive 57 percent increase in the number of registered insurance companies legally allowed to do business in the country.
The growth in the number of insurers is indicative of a trend which is being felt across the GCC region – foreign insurance giants, increasingly feeling the burden of struggling markets in western countries are ever more turning to the Middle East and Asia as key development prospects.
In fact, according to the GCC Insurance Barometer Study, approximately 60 percent of those surveyed stated that they expect foreign insurance companies to increase their market share by 2014.
The fact that the GCC has an extremely health expatriate community will not hurt the Foreign insurers in terms of market penetration, as locally based expatriates prefer to obtain their coverage from organizations which they are familiar with in their home nations.
According to the CEO of Arig, a Bahraini based insurance company, Yassir Albaharna, “Foreign insurers continue to show much appetite for the GCC region and increasingly teaming up with local partners rather than establishing a green field presence.”
Other respondents to the Insurance Barometer study cited foreign companies’ higher levels of technical expertise, customer focus, distribution networks, and financial backing as key reasons why these organizations, and not GCC based insurers, would be best placed to capitalize on the recent success of the region’s insurance sector.
A majority of respondents expected to see strong growth in the region’s Takaful Market. However, contrary to this expectation, Takaful insurance, products adhering to Islamic Muamalat laws, have been one of the weakest lines of business in Bahrain. Takaful products have seen a loss each year for the last decade, except during 2010 when Takaful lines posted a 32 percent overall profit.
A number of the organizations and individuals surveyed for the GCC Insurance Barometer study, while not in the majority, indicated that they felt Takaful was falling short of the expectations which local providers had hoped this line of business would achieve, and termed the performance of Takaful products “disappointing.”
While not totally sidelining the possibility of a Takaful resurgence in the coming years, as the products did in Bahrain during 2010, it was indicated that Takaful insurers would need to develop compelling business models in order to realize success in the vibrant GCC insurance sector; a lack of compelling business models has been highlighted as the prime reason for the relative under-performance of these types of products.
In general, the future is bright for the insurance industry throughout the Middle East. With a number of initiatives on the cards, including mandated employer-provided health insurance for a number of countries in the GCC bloc, and improved regulation of domestic insurance markets in these countries, the Middle East can be said to be a shining opportunity for insurers globally.
Established in 1996, Jordan based Arab Orient Insurance Company is currently one of the leading providers of general insurance in the Middle East.
Operating as a subsidiary of Gulf Insurance Company, AOIC prides themselves on reliability, quality and superior customer service and believes these characteristics have helped them to dominate the competitive market whilst showing consistent growth over the years.
With the Middle East rapidly becoming a global business hub, the economy of Jordan continues to grow and entice expanding businesses. AOIC has reacted positively to this change and has grown along with the country in which it is based. However, the company has always envisioned expansion in their future and hopes to be the first local company to establish an international presence for themselves by expanding wherever possible.
British international insurance giants Bupa are helping to fulfill this desire and have signed an agreement enabling AOIC to offer worldwide international health insurance as well as improve the quality of their local insurance services.
The collaboration will undeniably have a positive impact on both parties by combining AOIC’s local expertise in Jordan with Bupa’s knowledge and experience of global health insurance.
Bupa first entered the Middle East insurance market over 10 years ago when it successfully planted its roots in Saudi Arabia and formed Bupa Arabia. Now the kingdom’s largest health insurer, Bupa will undoubtedly continue to make its mark on the Middle Eastern health insurance industry by forming this positive partnership.
AOIC will continue to offer a range of insurance products, but those offered in the health sector will now be serviced by Bupa International and as a result, members of such products will be able to receive treatment in more than 7500 participating hospitals and clinics worldwide as well as the 24 hospitals in Jordan that have now been added to Bupa’s ever expanding network.
Deputy CEO of AOIC’s Medical insurance and customer care Mustafa Melhem is pleased by the prospects the partnership can offer, hoping they will now be able to offer customers an even more personalised experience with unique custom-made plans to fit their personal requirements.
AOIC has high hopes for its development and believes its continuous growth will help place Jordan in amongst the list of top countries providing the best insurance services in the Middle East.
With the backing power of the worlds leading expatriate health insurance provider now behind them, there is a good chance they will be able to do exactly that. Furthermore, the reputation that Bupa carries both in the UK and internationally should not only benefit AOIC but should positively impact the Jordanian insurance market as a whole.
It is partnerships such as these that enable Bupa to stay ahead of the game in international health insurance and it appears that the Middle East may witness many more alliances in the future.
Both Qatar and Dubai are well placed to become regional insurance hubs, reports have revealed, following the creation of a Governmental partnership with Samsung Life Insurance in Dubai and the implementation of a national health insurance law in Qatar.
According to a Financial Times report, the Investment Corporation of Dubai is set to agree to a memorandum of understanding with Korea’s largest Life Insurance underwriter, Samsung Life, to deliver high quality life protection products to the Middle Eastern and North African Regions. Historically both underserved markets for life products, the ICD and Samsung intend to grow the distribution of life insurance plans across the region with a view to entering the less developed markets located in Sub-Saharan Africa.
Read the rest of the Qatar and Dubai Set to Become Major GCC Insurance Hubs article
May 1st was International Labour Day, a date that celebrates the contributions and progress made by workers in industrialized nations over the past two hundred years. The occasion was perhaps a fitting time for India to formally announce a new life insurance and pension fund that specifically targets the country’s sizeable overseas workforce in a bid to better address their social security and resettlement needs going forward.
The Indian government’s Pension and Life Insurance Fund (PLIF) was officially launched by the country’s Minister for Overseas Indian Affairs, Vayalar Ravi, at a function held over the holiday period. The scheme looks to fulfill a promise made by Prime Minister Manmohan Singh last January to improve upon India’s expatriate benefit framework, and could help the country’s millions of overseas workers, especially those now working in Gulf Cooperation Council (GCC) states, invest back in their home country and prepare for their future resettlement and retirement. The low-cost life insurance plan that covers against natural death for the period of time they are abroad is furthermore expected to become a key savings tool for many families while their breadwinner works abroad.
The PLIF scheme has been designed to provide three distinct benefits for India’s expatriate community: pension planning, life insurance cover, and resettlement compensation. Any Non-Resident Indian (NRI) or overseas contract worker aged 18 to 50 who want to save for resettlement and retirement through the PLIF program will be eligible with a valid work permit and proper immigration clearance. This stipulation would entail holding an ECR (Emigration Check Required) passport or an active employment contract in an ECR country. While the government wants as many overseas Indians covered as possible, the PLIF scheme will be based on voluntary contributions by expatriate workers. Under the provisions of the PLIF, the Indian government will contribute INR 2,000 (US$40) for every member paying between INR1,000 (US$19) and INR12,000 (US$230) into the fund annually, and female overseas workers will be eligible for a special co-contribution worth an additional INR1,000 (US$19) a year.
When it comes time to collect, the three arms of the PLIF scheme will be managed by three different operators. Pensions will be regulated by India’s Pension Fund Regulation and Development Authority (PFRDA), the savings for resettlement will be held in a mutual fund controlled by the Securities and Exchange Board of India (SEBI), and the life insurance requirement will be managed by a dedicated insurance company. PLIF subscribers can begin to withdraw their savings after five years, capped at 50 percent of their account value. If this occurs, 40 percent of the remaining funds will be paid back as lump sum once the policyholder turns 55, with the rest reserved for a monthly pension. PLIF subscribers who return to India before retirement can maintain their savings account for old age through their bank and the electronic claims system.
In addition to this expatriate pension scheme, The Ministry of Overseas Indian Affairs (MOIA) has also set up an Overseas Workers Resource Centre, which is a 24/7 telephone helpline for Indian emigrants and their relatives if they need information about legal procedures, country-specific risks, and what they should do if things go wrong while abroad. The announcement of this new hotline followed the establishment of the Indian Community Welfare Fund (ICWF) to assist distressed expatriate workers in 2009 and other moves made recently by the MOIA to update their electronic documentation network and generally improve upon the country’s strained emigration system.
India’s expatriate workforce is growing not only in number but also in political clout, as successive governments try and entice the country’s large overseas workforce with initiatives to encourage greater reinvestment back home. It is estimated there are around 25 million Indian citizens currently living and working abroad, an entire nation in and of itself. While other prominent Asian countries like China and the Philippines have been able to reap substantial economic reward from their expatriate workforce through sizable remittances and trade activity, India’s emigrant contributions remain muted, and thus the national government is now trying to more actively engage their overseas diasporas in a bid to boost domestic fortunes.
Of particular interest are India’s expatriates in the Gulf. Indian immigrants make up a considerable proportion of the region’s working class, with many moving to the rich Gulf States during the oil boom to work as construction laborers, domestic helpers and in other more specialized fields. The region has been an attractive destination for South Asian migrant labor due to the higher salaries available and the relatively short travel distance to the subcontinent. However as more of Indian workers move east, problems begin to emerge. Citizenship, permanent residency and other legal rights are seldom granted to immigrants working in these Gulf countries and as a result maintaining affordable access to necessary services like healthcare and retirement planning has become a serious problem for most Indian expats. Added to this now are increased regional security concerns surrounding the aftermath of the Arab Spring revolutions last year.
The moves made to address the expatriate social safety net follow renewed efforts made by India’s chief insurance regulator (IRDA) to improve the country’s insurance market and encourage the rising number of Indian middle-class consumers to make more proactive insurance and investment decisions. The county’s insurance sector has grown rapidly over the past decade, driven in particular by the popularity of unit-linked life insurance products, which have dominated the market. Since the Indian insurance market was first opened up to the private sector by the Insurance Regulatory and Development Authority Act in 1999, total insurance penetration across the country has nearly doubled, with the local market overtaking several developed economies in terms of premium output in the process. Critical to this growth has been the input from the international insurance industry. Overall, India represents one of the world’s fastest growing insurance markets, with rising income levels and growing awareness of risk management amongst the populace expected to drive a substantial demand for cover and investment solutions nationwide. Foreign multinational insurance companies have played a big part in this development but contributions from the country’s tremendous expatriate populace should look to play a large part in this development as well.