The changing business landscape has created a new level of complexity for today’s CEOs. Facing new demands, challenges, and opportunities, great leaders will be those who are able to adapt and innovate to achieve success for the company, while proving their mettle as a trailblazer.
The MENA insurance industry enters 2018 cautiously after a challenging and tough business period last year that tested the resilience of the market. Growth in the region is estimated to have slowed sharply to 1.8% in 2017 from 5% the year before on the back of oil production cuts and continued political tensions.
In addition to economic and geopolitical issues, the insurance industry is grappling with other challenges, including complying with regulatory changes, keeping up with technological developments and meeting consumer needs and expectations.
Responding to challenges
Given the highly dynamic geopolitical environment, players operating in the region need to adjust their growth and investment strategies to adapt to the changing economic environment, said Mr Atinc Yilmaz, Regional CEO - Turkey, The Middle East & Africa at Howden Insurance Brokers.
“Companies need to manage their risks more efficiently, increase their sustainability to change, be more competitive under the pressure, and learn how to be more agile,” he said.
Like other sectors, the insurance industry has been vastly affected by the recent economic developments in the region, particularly the drop in oil prices, said Mr Cedric Charpentier, CEO at AXA in the Gulf.
“The current market situation has led, on the one hand, to increased competition among insurance companies and, on the other hand, to economic pressures making consumers reconsider any expensive or long-term purchases,” he said.
Consequently, “insurance tends to be pushed further down in the list of priorities. Many consumers are not aware that insurance is, in fact, an asset that will protect them in times of financial difficulty”, Mr Charpentier added.
Surviving profitably in this challenging environment will be a true test for market leaders, said Mr Christos Adamantiadis, CEO of Oman Insurance Company (OIC).
He said: “We have been swift in adopting new regulations; proactive in offering our partners and customers digital solutions and services so they can access our services as conveniently as possible, and launched an in-house OIC Academy that delivers bespoke workshops, trainings and also extended insurance certification programmes through partnerships with highly-recognised industry institutes.
“While we hope that these measures would prove sufficient for our journey ahead, we understand that innovation must remain continuous, and solutions must be consistently reviewed, revamped and redefined for future successes.”
When responding to challenges, differentiation comes from a continuous improvement in delivering the basics of insurance, said Mr Ahmad Idris, CEO of Abu Dhabi National Insurance Company (ADNIC).
“We focus relentlessly on putting the customer at the centre of everything we do. Also, we know that as soon as we jump ahead, our competition will catch up and overtake us if we do not keep innovating,” he said.
Accordingly, Mr Idris said his company will continue to invest in people and technology so as to be at the forefront of responding to the challenges, “but always with a steady focus on the quality of our insurance services that our customers expect from us”.
Meeting the expectations of tech-savvy customers
However, in this era of fast-changing technology and the continuing spread of the internet, today’s customers are better informed, harder to please and less loyal.
Hence, insurers need to improve the rules of customer engagement to meet the digital demands of consumers.
The entry of unconventional players, eg, Amazon, within the insurance space also entails that CEOs of insurers and takaful operators will need to evaluate and include technological innovation within their core strategic planning, said Mr Muhammad Owais Ansari, Member of the Executive Board, FWU AG.
As a leader in the insurance/takaful industry, Mr Ansari said “it is imperative for a company to firstly assess the current level of technology adoption within the business in its day-to-day operations. It is important to plan for quick wins by applying technology to automate key business processes for their customers. Additionally, a company needs to have medium- and long-term plans which enable it to revisit and redefine the overall business model and assess core technological needs”.
It has often been said that the insurance industry has been slow both to adapt to and to adopt new technology compared to other industries, and there is some truth in this, said Mr Idris.
He explained: “Waiting for change to be forced on us is not an option. But just using new technology for the sake of it is also not a prudent course of action. Ours is a very personal business, especially when our customers need to make a claim.
“Our customers won’t be impressed by the deployment of new technology unless it makes it easier for them to purchase a policy and get claims paid. So, we proactively look for ways to make sure that our customers can, if they wish, do all their business with ADNIC online. But if they need to talk to us, we have someone equipped with the right technology, information and training to deal with their issues quickly and efficiently in a very personal manner.”
A slower growth environment will also force insurers to look at smarter and more efficient ways of working and servicing their customers, said Mr Adamantiadis.
He added: “Digital deliveries ‘inside’ and ‘outside’ are key to future successes, and only sound investment in rapidly advancing technology today will keep us ahead of the game tomorrow.”
Nurturing next generation of talent
Another challenge facing the industry is attracting, engaging and retaining the next generation of millennial leaders to lead the company to its next phase of development.
Preparing leadership succession is vital for organisational success, and leaders need to identify the skills and competencies that will enable this as well as the readiness of their talent to ensure a smooth succession, said Mr Charpentier.
For this to happen, he said “leaders need to build an organisation that attracts the calibre of talent through a strong employee value proposition that delivers what it promises”. This can be achieved by providing a conducive working environment and fostering employee experience to build a brand that talents are drawn to, he added.
Mr Idris noted that leadership is also about creating an environment in which staff are inspired by a company’s values and motivated to be the best. He said: “You cannot just recruit talented people and expect them to stay with you unless you empower and reward them for great delivery.”
Agreeing, Mr Adamantiadis said a healthy corporate culture that empowers its employees and nurtures excellence and innovation can go a long way in attracting the right talent. “Equally important is the delivery of leadership programmes. This ensures that the organisation is driven forward by a cohesive team of inspired, knowledgeable experts, with true clarity on market dynamics. Such programmes also allow for consistent progress towards corporate goals, and clear succession plans so that crucial strategic initiatives advance seamlessly.”
For the conventional insurers, attracting talented employees has been easier than the takaful operators, as there is a significantly larger resource pool available, said Mr Ansari.
However for both conventional insurers and takaful operators, “recruiting talented employees is the easier part; retaining such talent has been a challenge”.
In terms of engaging tech-savvy individuals, Mr Ansari said it is important to note that the experts in the new evolving technologies (AI/Blockchain) come with a different mindset and working environment. He said: “They are disruptors by nature and hence need their space to develop new ideas and solutions for the business. Given that the insurance/takaful business requires specific skillsets like underwriting/claims handling, companies have found difficulty in integrating younger and technology-driven personnel within the existing organisation structures.”
A successful approach has been to create incubator-styled departments in the organisation where the experts for the new technologies are provided the environment and freedom to innovate, he added. These innovation teams will be reinforced by dynamic insurance experts who bring with them the knowledge of insurance/takaful business.
Being proactive
Although the region is currently undergoing many changes, the outlook for the insurance industry is optimistic as key drivers of growth are expected to remain, including a continued diversification of economies towards non-hydrocarbon activities, a young and growing population, increased awareness of insurance products, and an improving insurance regulatory environment, said Mr Charpentier.
To succeed in today’s uncertain and complex environment, Mr Yilmaz said insurance leaders should have a good understanding of the market that they are operating in. “The Middle East has its own culture and, in order to grow business, CEOs should first understand the culture of their shareholders, clients, employees and other key stakeholders and be able and willing to change where required.”
CEOs should also be agile enough to adapt to economical, technological and geopolitical changes, ensuring that their business strategy is able to cope with the dynamic trends and challenges in the operating markets, he said.
Change is coming, and “it’s your decision if you want to be reactive or proactive”, said Mr Sanjay Jain, MENA Insurance Advisory Leader, EY. “Having an open mind to possibilities is extremely crucial. Competitive benchmarks for the industry are not within fellow insurers anymore, but with the banking, mobility, hospitality, and online shopping experience.”
CEOs who respond to these challenges innovatively and decisively will be the ones that will emerge as industry leaders, he said.
While the unpredictability of the geopolitical situation in MENA may not inspire optimism, there are a number of positives in assessing the region’s potential, including Saudi Arabia’s bold moves towards implementing its Vision 2030 agenda, the introduction of VAT in Saudi Arabia and the UAE, better growth forecast by the World Bank and IMF amid rising oil prices, and preparations for events such as the World Expo 2020 in Dubai and the 2022 FIFA World Cup in Qatar.
Without doubt, there are still growth opportunities and for insurance CEOs, it will be about turning challenges into opportunities and continuing to find avenues for growth. M
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Leadership traits of today’s CEOs
In an uncertain commercial and geopolitical environment, threats to business growth are becoming more complex. We ask business leaders in the Middle East region on what are important traits an insurance leader or CEO should have to lead their organisations through these tough times.
“In today’s social media dominated world, any disconnect between hype and reality will be swiftly discovered. Accordingly, therefore the leader must have a clear, bold vision of what he wants to achieve, and the ability to communicate that vision relentlessly and with integrity to his team and his customers.
His team needs to believe not just in the vision but in him as a leader. The team needs to see that as a leader he lives the values he espouses. His customers need to believe that the messages he sends to the market through his team will be delivered in reality.”
Mr Ahmad Idris,
CEO, Abu Dhabi National Insurance Company
“In today’s fast-paced world, the most important qualities for business leaders are agility and adaptability. It is important to remain hungry for knowledge and to know how to properly use key information to best serve the organisation. Undoubtedly, this will benefit the business since leaders will be better equipped to identify new opportunities and improve work efficiency to enable sustainable long-term growth.”
Mr Cedric Charpentier,
CEO, AXA in the Gulf
“The insurance/takaful business would look very different in 10 years’ time and a good leader would need to be thinking of what the business needs to do today, so that it still survives and flourishes in 10 years’ time. No leader can claim to have a crystal ball which gives him the insight to find the ideal road to success, hence the evolution in the business model to perfection would require the following key qualities which an insurance/takaful leader/CEO needs to demonstrate: openness to new ideas; adaptability to change; and ability to execute correctly and swiftly.”
Mr Muhammad Owais Ansari,
Member of the Executive Board, FWU AG
“The CEOs should continue to monitor the latest changes on technology side which impact today’s operational environment. Insurance leader/CEO should also be able to communicate and connect with their clients and understand the demand and requirements from the clients’ side, which will help them to shape up the overall company strategy.”
Mr Atinc Yilmaz,
Regional CEO - Turkey, The Middle East & Africa, Howden Insurance Brokers
“Three things stand out: 1) the ability to ‘connect the dots’ and create commonality of purpose and direction; 2) the ‘nose’ to distinguish fads from underlying shifts in fundamentals in terms of how business is (and will be) conducted; and 3) the savvy to understand the potential of technology.”
Mr Christos Adamantiadis,
CEO, Oman Insurance Company
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