In terms of insurance, Dubai has possibly the most potential within the Gulf. If you compare Dubai as an emirate against other cities in Saudi Arabia that are quite large, like Khobar, Riyadh, and Jeddah, I would say Dubai has the largest mix of companies. The UAE is the most advanced in terms of the population and insurance uptake. Dubai is therefore a very competitive market. There are close to 60 companies operating here, and 160 registered brokers in the small market. New large players are coming to the market, such as the likes of Zurich, which is going to have an impact in terms of the competition in 2012. The biggest potential lies in health care. In Abu Dhabi, healthcare coverage is compulsory. In Dubai and other Emirates, it is non-compulsory, but it is going to become compulsory in the next couple of years. It may happen this year or the next, but it is bound to happen. And most companies have started to move toward offering healthcare benefits to their employees as the norm. There is also potential in terms of marine insurance, and AXA is primarily very strong in the area within the Middle East. The motor market has always been very competitive, but again there is growth potential depending on the costs, and there has been much improvement in 2011 compared to 2010.
Our focus when we started in terms of medical and life insurance was on the local community. However, expatriates comprise a big percentage of the population here in the UAE, and you cannot ignore that this is mainly an expatriate market. If an expatriate is in Dubai this year, he/she might be in Qatar the next year, or in the UK the next. We wanted to be able to offer a policy that they could take anywhere in the world, with the same coverage. This was why we entered into a partnership with William Russell, and at the same time, we wanted it to be tied to the rebranding exercise that we did. We therefore told the market that we were rebranding, enhancing the image, as well as catering to certain classes of business that we would not otherwise be able to service without the partnerships. We have very specialized products that we are offering to the banking sector now. We have structured a product that is designed to help banks offer loans and financing in an easier and cheaper way. This is a very well-established and mature product in Europe, but in the GCC I think we are the first company to offer this sort of product.
We are predominantly in corporate insurance, but increasingly we’re looking at the consumer space as well, including homeowners, personal accidents, and lifestyle products. We have large plans for all three. We are the leader in financial lines and directors in office insurance, for example. However, we are continuing our efforts in educating the markets. We spend time developing the market by holding seminars and publicizing novel insurance products. Chartis is a pioneer in terms of distribution innovations. The company aims to continue strengthening its relationships with brokers in the market. There is no doubt that brokers play a very important role. We have conducted a variety of research and market reviews, and the company has identified pockets of customer bases that are interested in online shopping. This is something we are looking to develop through our call center. As a retail-oriented country, there may be an opportunity to position insurance as a retail product. This is another type of distribution innovation. On the sales side of products, we see a need for a customer-oriented product. The incumbents have not refined the product to fit different income groups and national groups. We’re looking to brand insurance offerings both insurance wise and product wise in a way that fits specific segments. There’s another huge opportunity in terms of customer experience, which is largely underdeveloped.
The insurance market is consolidated at the country level—and the UAE is the largest insurance market in the region in close competition with Saudi Arabia, which had tremendous growth in the last few years. Dubai is in the top range of insurance penetration per capita when we compare it to other countries in the region. The market has evolved immensely over the last decade. In the late 1990s most health treatment was funded by the public sector. Governments became more and more aware of increasing health costs and inflation, and sought to shift the funding of healthcare to the private sector. Many governments in the region made the decision during the mid-2000s, and introduced mandatory health insurance. Coupled with this move, employers wanted to offer more and more benefits to their staff and many companies are now providing medical insurance. We have seen double-digit to triple-digit growth in the past three or four years, and now about 80% of the population is insured. We don’t consider the market totally saturated yet; there is still room for new products and ideas. There is definitely new business coming in as the new numbers of people arriving to this country are still very high. We are currently managing 4 million claims annually amounting to $550 million.
DAVID T. YOUSSEF
Dubai was built as a regional hub rather than a local economy. Our place of work is Dubai, where we enjoy a nice lifestyle in a fairly open society, with the proper infrastructure and political stability. Companies are based here, but many conduct business outside of the Emirate. For example, this is the regional office for the Middle East and Africa, and Dubai is just one of the markets in which we operate. Some of our primary markets abroad are Qatar, Bahrain, Kuwait, Kenya, and Tanzania. We’re also moving into South Africa, Uganda, Zimbabwe, and North Africa in the future. Looking at the neighborhood, other options could include Lebanon and Saudi Arabia, but these countries have drawbacks, such as occasional political strife, size, and lack of dedicated resources. From an expatriate perspective, and as an international investor, Dubai is more comfortable. It is crucial to attract the best people who can manage businesses successfully, and if we can’t attract high-caliber staff, it will be difficult to protect our investments. Dubai attracts people, especially when comparing it to the rest of the neighborhood and region. Currently, the UAE is home to the largest insurance market in the Middle East. We’re projected to close at about $6 billion in 2012 for some 5 million people. The market is even larger than in Saudi Arabia, where forecasts predict $4 billion of premiums for a population of 25 million.
OMER HASSAN ELAMIN
The market is very competitive. There are about 63 insurance companies and 175 insurance brokers. Owing to these circumstances, the market is facing a culture of intense competition. In addition to the large number of companies, six huge businesses control roughly 60% of the market. We offer a variety of niche products. A very successful product that we have launched is guaranteed auto protection, or GAP insurance. It is a product that pays the difference between the original purchase price of your vehicle and its depreciated value. If a customer purchases a car today, uses it for two years, but totals the car before the end of the second year, our policy will cover the difference between the damages paid and the original value of the car. Clients find themselves back to their original financial position from before they purchased the car. This enables our customers to purchase a new car without suffering financially. Health care is one of the fastest-growing sectors for insurance companies. However, this means that the sector has also become a battleground for the insurance industry. Companies are constantly fighting for a larger share, and one of the problems in the market is that healthcare providers and hospitals are increasing their prices.
© The Business Year