UAE, DUBAI - Finance
CEO, RAK National Insurance
Andrew Smith graduated from the Institute of Islamic Banking while concurrently working on his Master’s of Science in Development and Performance Management at the University of Leicester. He has worked for publicly listed multinational companies and privately owned businesses in over 30 years of professional experience.
In terms of what we have achieved this year, there are clearly a couple of highlights; we were selected as one of the seven participating insurers for Dubai’s mandatory health insurance scheme, which is a significant achievement for us as an organization. Another milestone going into 2015 was the planned majority share acquisition by National Bank of Ras Al Khaimah (RAK Bank). The UAE is a highly competitive market with over 60 insurers. Having a partner like RAK Bank will add value to RAK Insurance, increasing distribution capability and affording us the opportunity to move into new markets and offer new products. The third milestone this year has been to introduce a new online distribution channel; clients will be able to go online and buy a range of insurance products and obtain valuable service offerings. On top of that we have been going through a transitional period as an organization. We set a new strategy for the company in 2013, which runs through to 2017.
As a company, we are a composite insurer, which means that we sell both life/medical and general insurance products to both corporate and retail clients. Moving into 2015 and beyond, we will be looking to expand our footprint in the retail sector. In that respect, our product range will become more focused, specific to each and every need of the client, with an eye on simplifying the structure and pricing of the products. We are also making it easier for clients to shop for products.
The initial focus has been on adopting a multi-channel approach to distribution. We are working closely with brokers, looking at bancassurance, corporate, retail, and e-commerce, as well as building for the first time, our own direct sales force. We are beginning a multi-channel approach to distribution, repackaging or restructuring our product offerings, and making it easier for a client not only to buy the product, but for them to understand what they are buying. We went through a complete transformation in terms of our brand in May 2013. Our brand was the starting point because we want to be seen as a different insurer, appealing to a more affluent sector of the market.
I felt that there was a space in the market for a local company having a global perspective. We spent a lot of time, effort, resources, and money on areas like risk management, internal control, and governance. As a publicly listed company, I have obligations not only to the regulators, but to my shareholders as well. We take the best practices from the global market and embed them into a local company.
There are certainly some clients, either corporate or retail, that would find it more appealing to deal with a local company, simply because we have been here for 40 years and many of our global competitors here in the UAE have not been. We have a much better understanding of the local market, particularly when we are dealing with the local population.
As the population in Dubai continually increases, especially within the expatriate population, the need for health insurance is becoming more and more a necessity, not only from an employee’s perspective, but also from the employers’ and government’s perspective. I think the Dubai Health Authority (DHA) has done a good job in developing the initial structure and putting in place what will be a world-class healthcare offering. The DHA and the participating insurers will now learn and adjust accordingly.
Dubai and Abu Dhabi are the two driving Emirates. Infrastructure projects, especially tourism projects and all the related services that have underpinned that, are driving the business. That said, there has been a downside to that; the pricing of insurance in the corporate sector is way below where it needs to be for long-term profitability and is not sustainable at current levels. Dubai won the right to host the World Expo 2020 and this is going to provide a fresh impetus for more business opportunities in Dubai.
I believe there is continuing opportunity and optimism in the foreseeable future, but again, as I mentioned, pricing is becoming a challenge, as well as profitability for some companies. I believe regulation has a big part to play as the insurance industry moves forward and becomes more mature. Unlike Saudi Arabia, which is well regulated by the Saudi Arabian Monetary Agency, the regulator in UAE is working through a number of challenges that the sector faces. Although there is significant market opportunity, I believe the competition is very strong, while pricing is weak and there is over capacity in the market as well. Companies that want to succeed will have to deliver better quality products and better quality services, and they are going to have to become much more consumer focused than they have been in the past.
© The Business Year – December 2014
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