Posted on Jul 13, 2012 by Sergio Ulloa
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.