Middle East Insurance Slowdown Sees Development of New Products

Posted on Aug 30, 2011 by Sergio Ulloa (G+)

A number of financial reports released by Qatari insurance companies on Monday indicate that the country's insurance sector may be poised to experience a significant slowdown. Five Qatari insurance companies, operating mainly in the non-life insurance market, have indicated that the sector's total net profits have risen by only 2 percent during 2011, compared to 9 percent for the same period in 2010. The companies, which include Qatar Islamic Insurance, Qatar General Insurance and Reinsurance, Al Khaleej Takaful, Qatar Insurance, and Doha Insurance, saw the sector's net profit for January - June 2011 reach QR 545.96 million (US$ 149.91 million), compared to the QR 537.11 million (US$ 147.48 million) in profits seen for the same reporting period in 2010. The data on the general profitability of these five Qatari insurance companies was released by Qatar Exchange data. One of the primary reasons cited by the insurers with regards to the lower than expected profits in the first half of 2011 is due to the rise in premiums yielded to reinsurance companies. Reinsurance premium yielding has risen by 8 percent for Qatar's insurance companies in 2011, with three companies actually yielding more than 55 percent of total written premiums to reinsurers. With the levels of premiums being yielded to reinsurers outstripping the total growth in premium revenue for the market, profits have inevitably come in at lower than expected levels. Profit growth for the first half of 2011 for the five companies, compared to the same period in 2010, stood at: Qatar Islamic Insurance: 1.83 percent growth in 2011, up from 0.43 percent in 2010. Qatar General Insurance and Reinsurance: 1.83 percent growth in 2011, up from -7.31 percent in 2010. Al Khaleej Takaful: 11.29 percent growth in 2011, down from 46.85 percent in 2010. Qatar Insurance: 10.74 percent growth in 2011, down from 65.77 percent in 2010. Doha Insurance: -8.80 percent growth in 2011, down from 60.55 percent in 2010. While the slowdown of the non-life insurance sector in Qatar does not pose major concerns at present, it has highlighted the need to create innovative policies with which to cover underserved segments of the Middle Eastern insurance market. One company taking notice from the Qatari slowdown is the Dubai Islamic Insurance and Reinsurance Company, also known as Aman, which is headquartered in Dubai, UAE. Aman's CEO, Hussein Al Meeza, announced the creation of two new types of protection policy which would focus on affording medical cover to Indian expatriates working in the United Arab Emirates. The Indian Expatriate Medical Insurance plans from Aman are being run in conjunction with ICICI Lombard, one of India's leading insurance companies. On creating the plans, Hussein Al Meeza said; "If you check the structure of the population in the UAE and what relation it has with Emiratis, they are our partners; they are our brothers. They are also the people who (are) behind all the work that has been done here. The relationship that we have with the Indian population was not (built) today or yesterday. Also, we have (an agreement) with ICICI Lombard, which is one of the top names in the Indian market." Mr Hussein went on to say; "Europeans already have the culture of insurance. They have very advanced products. We are looking to see where the opportunities are to provide services. We are looking at the Arab world, Pakistanis, Bangladeshis and Filipinos. It needs a background from the countries, because India has a platform for service providers½ The Indian (expatriate population) is a big market and there are a lot of opportunities. Also, we got the right partner for the products." The policies, named "Rishtey" and "Health on Return," aims to give Indian expatriates in the UAE a wider choice with regards to their medical cover than they have previously been afforded. The Rishtey plan would see UAE expatriate workers obtain medical insurance cover for their families in India, while the Health on Return policy would provide health insurance protection to those same expatriate workers in the event that they return to India for a short stay. Additionally, the Health on Return plan also offers the expatriate Indian workers the option of having retirement health insurance cover, creating a far more flexible and comprehensive health insurance product than any which currently cater to this niche market segment. While a slowdown in Qatar's general insurance market may pose a concern for the region, industry analysts are aware that there exists significant potential with regards to developing ever more unique products for the GCC insurance sector. Insurance Companies Mentioned Qatar Islamic Insurance Founded in 1995, Qatar Islamic Insurance, also known as QIIC, operates a number of lines of insurance coverage. Offering insurance based on Islamic principles QIIC offers coverage for all risks from Aviation to personal protection. Qatar General Insurance and Reinsurance Qatar General Insurance and Reinsurance was founded in 1979, and is a Qatari national company. Qatar General Insurance and Reinsurance offers both individual and business insurance products in Qatar. Al Khaleej Takaful Founded in 1978, Al Khaleej Takaful operates primarily in the general insurance and reinsurance markets. Covering risks including Property, Engineering, Liability, General Accident, Marine Transit, and Marine Hull, Al  Khaleej has proven time and again to be an innovative insurer. Qatar Insurance Company Founded in 1964, Qatar Insurance Company, also known as QIC, is Qatar's oldest insurance provider. Operating a number of personal and business insurance products across the GCC, QIC is one of the most established insurers in Qatar. Doha Insurance One of the younger insurance providers in Qatar, Doha Insurance was founded in 2000. Establishing a Takaful products company in 2006, under the name Doha Takaful Insurance, Doha Insurance company offers a range of general insurance products. Dubai Islamic Insurance and Reinsurance Company Dubai Islamic Insurance and Reinsurance Company, also known as AMAN, was established in 2002 to provide comprehensive Islamic insurance products to residents of the UAE. Offering Motor, Home, and Medical Islamic insurance products, AMAN is one of the leading insurance providers in the UAE.