The Board of AirSP were pleased to welcome Charles Catt, a member of the association to deliver a fascinating insight into the growth and potential of the insurance market (both Sharia compliant and traditional insurance and reinsurance products) in the North African and Middle Eastern region.
Elaine Mason, an AirSP Board Member, of Belvedere Mead (www.belvederemead.com) makes the following comments:
Charles presented a very interesting talk which, for those present, gave a very good introduction to the insurance world in the Middle East and North Africa region. The following comments highlight some of the areas Charles discussed that I found most interesting.
Defining which countries are included in a MENA region is a matter of debate with different commentators including certain countries whilst others excluding them makes managing the opportunities interesting. Sharia law which can change from area to area as it is dependant on the local Islam clerics ruling on what is or what is not compliant is another factor that can make companies who are looking to expand nervous. London has so far not yet fully targeted the market, whilst the European insurers are leading the way. A member of the audience felt this may be because of old colonial ties - eg Morocco and France.
Demand and need for insurance also varies considerably across the different countries and is very much linked to whether the economy in the country is oil based or not. Whilst populations on MENA and the US are similar, the spend on insurance products in MENA is a small proportion of that spent in the US. The populations of the richer countries within MENA simply see no need to purchase, as the ruling government/family wealth will cover any problems, although in certain areas as individual wealth grows this may change.
There are about 500 insurance carriers in the region and 25 or so reinsurers. Most insurance companies are, like a lot of organisations, family based and the profit model is more based on a commission model with very low retentions as most business is reinsured out and therefore there may not be much attention paid to maintaining a profitable risk portfolio.
Political instability in places such as Egypt are a big factor, but this is less so in places such as Qatar or UAE. Charles also recounted some of his experiences of the region including trying to put together an insurance product to cover thoroughbred camels, along the lines of a bloodstock product. As anyone from the region would know camel racing is a big sport!
PLEASE NOTE THESE ARE ELAINE'S PERSONAL VIEWS AND INTERPRETATION OF THE PRESENTATION. AS SUCH, THEY SHOULD NOT BE RELIED UPON IN ANY CIRCUMSTANCES.