Jul. 13, 2016

Andrew Smith

UAE, Dubai

Andrew Smith

CEO, RAK Insurance

TBY talks to Andrew Smith, CEO of RAK Insurance, on competition in the sector and causes for recent success.


Andrew Smith has over 20 years of experience in both conventional and Islamic insurance. He is an experienced head of business in conventional and Islamic insurance with a successful track record of developing and implementing business plans across the UK and the Middle East. He holds a master’s degree from the University of Leicester, a post-graduate diploma in Islamic banking and insurance from the UK, and financial planning certificates from the Chartered Insurance Institute. He also completed the Hawkamah (IOD) Director Development Programme. He accepted his leadership role as CEO of RAK National Insurance in 2013.

How would you assess the competition in the UAE?

Competition in the insurance sector in the UAE is fierce. It is a competitive market and there are too many insurers in the UAE. Having said that, the UAE has growth opportunities even in the current climate where we are experiencing a slowing down in projects, company spending, and potential growth. This will have an impact on insurance, if not now then certainly in the near future. Even with growth in mind, there are too many insurers competing for market share. The pricing of insurance is depressed and consequently so is profitability. In 2016 the insurance sector will be challenged quite significantly by new regulations and a continued softening of prices. This will also add to the complexity of working in the insurance sector from 2016. One of our strategic initiatives is to protect the growth that we have experienced over the last three years. I do not envisage such significant growth in 2016, but we are aiming to continue to grow business profitability and focus on the right risks. We also want to improve on our customer service and technology. We have new products that are now available for the retail market. We are aiming to expand this in 2016 as we continue to develop more online and digital capability for retail clients.

What accounts for the success of the UAE's insurance sector within the region?

It stems from the open-market economy. The way the UAE government allows businesses to thrive is very entrepreneurial. However, in the next couple of years I predict Saudi Arabia will become the largest GCC country in terms of insurance premiums. That is not a reflection of the UAE, but Saudi Arabia has introduced certain measures around the pricing of insurance that have helped it increase profitability. The Saudis have introduced a form of price structuring, whereas the UAE still adopts a very open market. I think that the UAE insurance sector's success has been driven largely by the success of the UAE economy. They go hand in hand. We have seen the economy rising over the last 15 years in particular, and obviously the need for insurance has increased alongside that, both in the commercial and retail sectors. The commercial segment has expanded to deal with the new buildings, infrastructure, roads, public works, and projects. That has then filtered down into the retail side with more expatriates coming to the UAE and a growing Emirati population. The need to bring people, business, and services to the UAE to help encourage commercial growth has led to an increase in both the commercial and retail insurance markets.

Health insurance was recently made compulsory in the UAE. Do you expect any other insurance lines to become compulsory?

Compulsory health insurance has only been implemented for Dubai and Abu Dhabi. In Abu Dhabi it was established a few years ago by the Abu Dhabi Health Authority (HAAD), and in Dubai it was introduced in 2014 with the Dubai Health Authority (DHA), while there is still an opportunity for the other Emirates to introduce compulsory medical insurance. There is compulsory insurance for motor vehicles, and there are some mandatory car insurance classes on the commercial side. The issue is not so much a matter of making products compulsory, but increasing involvement by the regulators in terms of pricing. We may get to see some of that indirectly over the course of 2016 as the UAE regulator aims to impose a financial framework. However, some of the regulations that are going to be introduced in 2016 will require companies to focus more on appropriate technical based pricing. The enforcement of regulations is another important factor. The financial regulations coming in 2016 will have a positive bearing on the future of the insurance sector.