TBY talks to A.R. Srinivasan, CEO of Falcon Insurance Company, on reversing the fortunes of the firm, the impact takaful will have, and the Omani regulatory environment.

A.R. Srinivasan
A.R. Srinivasan graduated in Commerce from the University of Delhi and went on to qualify as a Chartered Accountant in India. He is also a Chartered Insurer from the Chartered Insurance Institute in London, as well as a Fellow of the Insurance Institute of India, Mumbai. He has over two and a half decades of experience across the insurance industry, specializing in reinsurance, underwriting, and claims management. He has experience in India, Oman, the UAE, and Bahrain.

How did you become one of the main players in the insurance sector here in Oman?

Obviously, the main insurance products that are being sold are similar in nature. Therefore, what sets each company apart is the way you provide your services and the way the client sees you. Over the last three years, which is what we have been focusing on, I am happy to say that there has been quite a turnaround and the company has grown. We have managed to take a lot of corrective measures in the company. From a loss-making entity in 2011, we are now profitable and all the past losses have been wiped out. Falcon Insurance is now joining the big-league players.

What is the composition of your portfolio?

Like all insurance companies, motor is the single largest portfolio. If you look at our target for 2014, around 38% of our projected premiums are from motor, while another 18%-20% are from the life and medical areas. Almost the same again, 16%-18%, are derived from property and energy. The engineering class forms about 8%-10%, and the rest is marine, liabilities, and others, which makes up the balance. Our major thrust has always been SMEs. We are a small-to-medium size insurance company, meaning we aim to insure SMEs. We prefer that we service clients across all their insurance requirements, from motor to medical, to group, life, and property. That is how we try to sell; in large portfolios. We are also expanding equally into the retail segment, which, until now, has not been a main thrust. Our major portfolio business is still corporate. Falcon Insurance currently only has three branches; however, we are looking to expand to one or two more and add on some alternative channels of business to improve the company.

With 22 companies present in a market of less than 3 million people, the Omani insurance market is beyond saturation. How do you respond to the high levels of competition in the market?

The market is extremely overcrowded with players, not only for insurance companies, but also for brokers. This makes it a very competitive market. By nature, the insuring public here is quite price sensitive, which keeps up pressure on insurance premium levels, which is not very healthy for the insurance market. This becomes starkly visible during years when the investment market performs poorly. When the investment market performs well, companies get good investment returns, which camouflages the negative results of their insurance operations. In the years that there is a negative investment market, the problems become more obvious. The last two years have been reasonably good for both segments. Motor is a business that is on the balance sheet of almost all the companies, meaning the impact of losses hits them much more than the other segments. In 4Q2013, we signed an agreement with Bank Muscat to provide life coverage for all the individual borrowers of the bank. This is a massive policy in terms of size, meaning that was a major win for us. In the 15-20 years prior to that, there was only one insurance company to achieve this. We are a major player in the life market, and this is clearly reflective of the fact that the market is now recognizing Falcon as an equally able provider. Fortunately, or unfortunately, we ended up having to pay the biggest banking sector claim. Again, the professionalism of Falcon Insurance and the auditing reinsurance behind it has led this claim to be fully settled. The market is very appreciative of the fact that this was done in such a short time. It was almost a $38 million claim, and was fully settled within a few months.