Following a reorganisation, Zurich’s general insurance business expects to see “high double-digit growth” in the Middle East this year, says regional CEO Brian Reilly.
Established in 2009, Zurich’s general insurance business in the region has witnessed “stratospheric growth”, said Mr Brian Reilly, CEO, General Insurance Middle East.
Without divulging figures, he explained: “We had to achieve this growth in order to generate the scale necessary to be profitable. As we have matured, we are now growing our business at a more sustainable level, but expect to deliver high double-digit growth in terms of gross written premiums in 2014.”
The Middle East general insurance business’ contribution to Zurich Insurance Group remains “very small”, he said, “but that’s no surprise when you consider that Zurich delivered business operating profit of US$4.7 billion in 2013. But the Group recognises that there is a fantastic opportunity in the Middle East and views our business as a growth engine.”
Sharing resources
In January 2014, Zurich merged its General Insurance office for Middle East and Africa (MEA) with the European office to form a new single region – Europe, Middle East and Africa (EMEA) – headquartered in Dublin. Mr Patrick Manley, who was CEO of Europe, now heads the new EMEA region. Almost 80% of the 60 employees impacted by the changes at the MEA regional office were redeployed to other parts of the Zurich Group, including roles within the new EMEA region.
The impact on the Middle East business has been “very positive”, said Mr Reilly, who was appointed to his current position last July. “We are now able to share resources, skills and expertise across a wider region that we are leveraging to the benefit of our customers and distribution partners. We also have even greater autonomy to make decisions locally, which is enabling us to respond quicker to customer and distributor needs and requests.”
In March, Zurich announced a plan to streamline its organisational structure. The initiative is focussed on the group, segment and region levels and does not impact the business units, which include the Life and General Insurance businesses in the Middle East. Zurich employs about 500 staff across both units in the region, and about 300 staff in General Insurance Middle East alone.
Growing in six markets
Zurich remains committed to growing across the six markets in which it operates – Bahrain, Kuwait, Lebanon, Oman, Qatar and the UAE.
Oman is a growth engine for the region and Zurich intends to commit more resources and support to help expand the market, said Mr Reilly, who was in Muscat recently to launch a new operating model for brokers.
“Zurich began operations in Oman in 2011 and we have used the experience from the last three years to refine our operating model to deliver a faster, simpler and more secure user experience for customers and brokers,” he said.
“We have introduced new dedicated toll-free 800 numbers for customers and brokers to allow them to get quotations, insurance cover or make a claim in only five minutes, without needing to visit a Zurich branch. In addition, we are planning to introduce a suite of new products and services later this year.
“But crucially, we are also enabling our distribution partners in Oman to directly access Zurich’s global and regional network of support and expertise. For instance, if an Omani customer or broker needs to find out how to insure a $1 million painting, then he can speak to our art insurance experts in Dubai who can provide advice on how to transport, hang and protect works of art – as well as receiving best-in-class insurance cover.”
Distribution developments
Zurich plans to roll out the new operating model for brokers across the region, as well as its 10-year agreement with HSBC Middle East, inked in April 2013 to distribute personal and commercial general insurance products. Initially focussing on the UAE, the agreement covers the entire MENA region and will extend to Oman, Bahrain, Qatar, Lebanon and Jordan.
Brokers contributed more than 90% of Zurich’s written business across the Middle East last year, including the Global Corporate business. “Looking ahead, I believe our broker business will continue to grow, but its contribution to our total written business will fall as I expect our HSBC relationship to truly flourish in 2014,” said Mr Reilly.
“I’m also confident we’ll have new bancassurance and affinity agreements to announce. Finally, I’m expecting to see growth in our direct channel when we roll out upgrades to our call center and website.”
Realising the potential
Zurich opened a branch in Doha in mid-2013, focussed on “providing our capabilities, resources and expertise to Qatar’s leading national insurance companies and brokers”, said Mr Reilly. “This includes risk engineering, claims and customer relationship management. The branch also provides additional capacity to the Qatari insurance market.”
He added: “We see a huge opportunity in Qatar due to its booming economy and burgeoning insurance sector and we forecast considerable growth over the next decade.”
The insurer is also exploring the Saudi Arabia market, “but our priority remains growing our business in our existing markets in the region.”
“There is still a lot of potential in these markets for us to realise,” said Mr Reilly, when asked if Zurich is exploring acquisitions in the region. “We will do these by further enhancing our propositions and customer services, maximising our existing relationships and building new relationships, including additional bancassurance agreements and affinity partnerships.
“We are also looking at new lines of business, segments and channels to market. For instance, you can expect to hear about a new small business offering in the early part of this year and more details of our direct channels.
“But of course, if there is an interesting M&A opportunity that complements our business in the region, then we would seriously examine its potential.”
Challenges and priorities
Customers remain as the key priority, said Mr Reilly. “We need to ensure we provide the best propositions and customer service in the market – if we do this then our business will grow and that will provide even more investment in our business to further improve our offering, expand our reach and generate greater opportunities for our people. To do this, we need great people and I believe that Zurich has the best team in the market.”
On the insurance industry in the region, he added: “The Middle East is still a market in its infancy undergoing radical change in terms of the competitive landscape, customer needs and the regulatory environment. And we are still faced with the challenge of low insurance penetration.
“Clearly, there is a lot more work that needs to be done to educate people and businesses on the benefits of insurance. But therein lies a fantastic opportunity for Zurich and the entire insurance industry.”