As the first licensed insurance company, how would you characterize Tawuniya's role in developing the sector?
Tawuniya has played a tremendous role working in line with the regulators, as well as developing Saudi nationals into a professional caliber in the field. Being the first licensed company, coming even before the establishment of the Royal decree, we worked closely with the regulators, such as the Saudi Arabian Monetary Agency (SAMA), to help support it and develop regulations for the insurance industry. We are establishing ourselves as a leader in all directions. Therefore, in terms of being a service provider, and in terms of being the best provider of all classes, we are promoting on the insurance side, and also championing our staff and the industry as a whole, encouraging the broader develop of high standards and high-caliber talent in the insurance business.
What is your assessment of the current regulatory framework?
Considering the time spent by the regulators to date, I consider it a true success story, and we are seeing continuous improvements in the regulatory framework within the country, which we are proud to be part of. However, in any new industry, we face many challenges, and it will take some time for the regulations to take hold. There are many compliance issues from most insurance companies, because it is a new issue for all players. Being a leader, you also want to lead in terms of compliance, which means developing yourself early on to be best prepared to meet any future requirements.
How do you see the challenge of poor awareness or perception of insurance being addressed over time?
I believe that awareness is growing at a rapid rate at the moment, and we have started to see people increase their insurance policies, be they compulsory or otherwise. People have become more aware of the advantages of insurance, having originally viewed it as a burden, rather than a benefit.
Tawuniya has a special role in developing local Saudi professionals in the insurance sector. How would you characterize the current level of local human capital in this sector and the steps you are taking as a company to raise this level?
We invest considerably in our people, because we are strong believer in human capital being the backbone of the company, and, therefore, we are busy providing the best quality on-the-job training for staff. One of our national obligations is to employ more locals in the industry, and we currently have more than a 77% Saudiization among our staff. The difficulty for all companies lies in the lack of experts in Saudi insurance, where thus far the only way to overcome it is to employ expatriates and have them train locals and encourage people to take on additional training as they go, in order to reach the requisite skill level. This is not easy, and will require a couple of years to achieve; however, we are proud to say that most of our current management team are Saudis, which is a pioneering development in our sector, being a national company. Moreover, we also have many projects in terms of career paths, succession plans, and training programs for staff in order to reach the required high level of expertise.
With 35 companies in a young but competitive insurance sector, what is your outlook regarding mergers and acquisitions?
There should be added value for any mergers and acquisitions, especially if this option is the only way to continue operating in the insurance sector. But we have not seen that at all yet, because I think the enablers are not yet present. And so if you ask, for example, companies to acquire other enterprises, it is not clear whether this would add value, or become a burden. I think it is also complicated when it comes to mergers, for example, in terms of how to value companies, how to merge, and who to merge with. Consolidation is not a preference at this time for insurance companies because they tend to assume that they can do better alone by increasing their capital. But going forward I expect the picture to change; either it will become a better market for everyone or else regulation could in part provide the solution. In addition, encouraging business plans for failing companies is a milestone, and perhaps with time the environment will change. The other problem is that without mergers and acquisitions in the market, we observe the continuance angle, and I consider the sector too saturated for the currently available volume of business in the Saudi market.
© The Business Year - May 2015