CEO Message

Middle East Insurance Review and Asia Insurance Review CEO Sheela Suppiah

Middle East Insurance Review (MEIR) is most honoured and humbled to be engaged as the official publication of the 34th GAIF Conference held in the beautiful Sultanate of Oman. The prestigious gathering coincides with GAIF’s diamond jubilee and Muscat is the perfect setting as both the Arab and international insurance markets bestow very high regard and confidence on Oman.

MEIR, launched in 2006, has played an active role in the past 18 years as a media partner of this, the largest regional gathering of insurers and reinsurers, and we look forward to bringing you fresh, comprehensive coverage over the next three days through our daily newsletter. We would like to acknowledge our appreciation of the Capital Market Authority and the Oman Insurance Association as the organisers, as well as to Oman Re as the official sponsor of MEIR’s daily newsletter, for this privilege.

The theme ‘Sustainability and Inclusivity in the Arab insurance industry: How Arab insurers leverage the AI revolution’ is indeed timely especially as the insurance world redefines itself to keep ahead of the AI revolution and all that it brings. This is a new horizon and a paradigm shift for the Arab insurance world not only to focus on financial and profitability issues but to cast their eyes wider to embrace ESG and broader societal goals. We salute the organising committee’s choice of theme as this will surely reshape the industry’s ethos. It is time for insurers to align themselves with global developments.

In addition, inclusivity, another focus for the industry, will allow insurers to reach a broader demographic, not only to address the new-age consumer, but also to offer workforce diversity and product offerings accordingly. And technology is an enabler for sustainability and inclusivity as it not only allows insurers to understand new diverse consumer needs better, it facilitates the customisation of new insurance solutions, instead of a one-size-fitsall approach, in a faster, more efficient way.

Oman’s significant transformation especially in innovation and the adoption of digital technology has resulted in sophistication in its landscape. It is therefore apt for Oman to be hosting this event focused on the AI revolution where many advancements such as InsurTech solutions are now integral to the operational efficiency and diverse needs of the Omani consumer. 

The well-chosen topics on the programme have been designed to address sustainability, resilience and the regulatory framework for AI adoption. We look forward to meeting the leading lights from the industry across the world as they descend on Oman’s shores to provide you with on-the-spot coverage on how the insurance sector is embracing the opportunities that AI brings for both local and international stakeholders in facilitating more accurate risk assessments and enhancing the customer experience. Whilst the opportunities are plenty, the industry must also brace itself for the challenges it faces from geopolitical and global unrests, cyber security risks as well as global economic concerns. The year 2024 will be a litmus test and it remains to be seen what the future holds for the industry as a whole.

On behalf of MEIR, we wish all the sponsors, speakers and delegates the very best and look forward to working closely with you in 2024. Enjoy Muscat.

At Oman Re, we recognise the power of collaboration and the importance of staying abreast of the latest industry developments. It is with immense pride that we align ourselves with Middle East Insurance Review, the region’s preeminent insurance publication, to sponsor the GAIF Daily newsletter at the 34th GAIF Conference in Muscat, which is a distinguished gathering of industry luminaries from the region and beyond
- Oman Reinsurance Company CEO Romel Tabaja

Further cooperation between Arab markets must be promoted

 

The primary challenge faced by the (re)insurance industry in Arab insurance markets is certainly the low insurance penetration compared to more developed insurance markets. Analysing the contributing factors to low insurance penetration leads to identifying the challenges that the insurance industry in the Arab world needs to navigate. These can be split into endogenous and exogenous factors:

Exogenous factors include cultural nonacceptance of the insurance concept as an important risk mitigation and transfer instrument. Despite the important progress made in past decades on this front, various stakeholders in the Arab insurance industry still have a lot to do to promote the importance of insurance solutions. Other evident exogenous factors are political instability in a growing number of Arab countries, the relative low level of GDP per capita, currency devaluation associated with high interest rates leading to claims inflation. Arab reinsurers are further affected by the low sovereign rating of many Arab countries, penalising them from securing competitive rating of their companies.

The Arab insurance industry’s endogenous challenges are various, the most important being non-adherence to best practices of corporate governance by many players in the region. This is a joint responsibility of the insurance players and the insurance authorities. This translated into fragmented markets with high number of insurance companies that is way beyond market needs, low retention levels of insurance players, non-technical pricing and poor claims services affecting the reputation of the industry.

Hopes for reinsurance in 2024

As an Arab reinsurer, our role consists primarily of supporting growth and prosperity of people and businesses in our region. That can be achieved through improved insurance penetration which is a joint responsibility of insurance authorities and insurance players in the Arab world.

We believe that insurance market consolidation is needed. The recent mergers and acquisitions in the GCC are a good development and we hope that further M&A will materialise in the coming years. We believe this will gradually lead to better corporate governance, increased business retention and ultimately will result in improved services and fair insurance products pricing.

Despite the role played by the GAIF since its establishment, we believe that further cooperation between Arab insurance markets needs to be promoted. Focus should be on easing the protectionist policies for Arab (re)insurers introduced in many Arab countries such as:

  • Restrictions on foreign investments in the local (re)insurance industry
  • Excessively high local compulsory cessions
  • Imposing challenging FSR rating requirements
  • Solvency adva nt ages for locally registered and capitalised (re)insurance companies
  • Imposing a minimum levels of market retentions
  • Higher corporate taxes imposed on foreign (re)insurance
  • Government assets insured only with national companies

Moving towards sustainability

Consolidation and cross-border cooperation between Arab (re)insurance companies is the priority, in our opinion, allowing for the creation of well-managed large (re)insurance entities able to compete against international players and capable to meet Arab insurance markets’ growing needs.

The role of the Arab insurance authorities is quite important in this process through harmonisation of insurance legislations in the Arab region with focus on corporate governance implementation , ERM standard enforcement, introduction of compulsory insurance products and the encouragement of Arab investments in the Arab (re)insurance sector.

The Arab region is facing risks beyond the capabilities of single (re)insurance companies such as Nat CAT, war, political violence and strikes, riots and civil commotion risks. Currently, most of the portfolios are placed internationally. The establishment of Arab (re)insurance pools, largely placed within the Arab insurance markets and supported by Arab governments, could be an efficient and sustainable model to promote insurance penetration and to meet insurance market’s protection needs.

The Arab insurance authorities might also consider easing eligibility criteria for cross-border Arab reinsurers to promote cooperation and contemplate joining forces for the establishment of an Arab financial strength ratings agency.

How do you think Arab insurers can use AI to promote sustainability and inclusivity?

Today, AI has a much wider - and immediate appeal - in various walks of our lives. As far as insurance is concerned, AI application in underwriting, risk assessment, customer service and claims settlement has become more in focus. By extrapolation to sustainability, insurance companies can optimise resource allocation, automate processes, elevate client experiences and nurture sustainable practices by incorporating AI into many facets of their operations. This will result in achieving economic sustainability by operating more effectively as well as generating growth
By integrating AI into existing processes and workflows, organisations can effectively support critical areas such as diversity and inclusion, employee wellbeing, training and development. For example, by using AI screening, companies can eliminate bias in recruitment and hiring by focusing solely on qualifications and skills to identify the best talent irrespective of gender, race or other personal factors, fostering a more diverse and inclusive workforce.
- Trust Re CEO Yassir Albaharna
One of the main issues faced by the Arab insurance industry is the limited penetration and access to insurance for lower income individuals and small businesses. This creates a major protection gap especially for individuals who are vulnerable to accidents, health incidents or the loss of income-providing family member; and small businesses are susceptible to events such as property damages and business interruption that would jeopardise years of effort.
To give Arab insurers the benefit of the doubt, there are many factors that hinder product development: Lack of accurate and updated data, costs associated with data gathering and policy administration, limited distribution channels and perceived limited premium per capita/small business.
AI can solve those limitations, streamline operations and improve the cost of gathering, analysing data, as well as facilitating the development and administration of products that caters for underserved segments and hence, improve sustainability and inclusiveness.
- Kuwait Re CEO Dawoud Al Duwaisan
AI helps the insurance industry put massive amounts of data to optimal use. Insurers can use AI to craft individualised policies, automate underwriting processes and provide estimates with greater accuracy to customers all over the world. The use of AI in insurance has the potential to yield economic and societal benefits that go beyond insurers and their customers by improving risk pooling and enhancing risk reduction, mitigation and prevention.
It also helps to increase focus on offering a personalised experience. For instance, insurance providers can present a tailored policy based on the driving history of the applicants, including any speeding fines, traffic stops and accidents, data-driven services can make insurance more appealing to a larger spectrum of clients. Insurers can employ AI to develop and refine long-term sustainability strategies.
This involves using AI to forecast long-term environmental trends and their implications on insurance portfolios. Such strategic planning is essential for insurers to adapt to the evolving regulatory landscape focused on sustainability and climate change.
- Milli Re international underwriting manager Gokhan Aktas
Leveraging AI capabilities can help the Arab insurance industry enhance its sustainability efforts and promote inclusivity, ensuring that insurance services are accessible and tailored to the diverse needs of the population.
Here are some examples of how AI can contribute to these goals:
  • Risk assessment and management
    AI has the capability to analyse vast amounts of data and provide information that can help insurers to identify, assess and manage emerging risks related to climate change, natural disasters or other sustainability challenges leading to more sustainable underwriting practices.
  •  Customer segmentation and personalisation
    AI can analyse customer behaviour and preferences to offer personalised insurance solutions that cater to the specific needs of diverse customer groups, considering factors such as income levels, geographical locations and cultural preferences.
  • Customer services and accessibility
    AI-driven chatbots and virtual assistants can improve customer service by providing instant support, answering queries, and guiding users through the insurance process. This enhances accessibility for a broader range of customers, including those with different language preferences or varying levels of technological proficiency.
  • Fraud detection and prevention
    AI can automate claims processing, making it more efficient and less prone to errors. It can also enhance fraud detection capabilities which can help insurers’ sustainability by minimising financial losses.
  • Eco-friendly practices
    AI can enhance operational efficiency, re-engineer processes and reduce consumption of paper thus contributing to sustainability by minimising the environmental impact of insurance operations.”
- FAIR secretary general Mo’men Mukhtar
For several years, AI has pushed insurers to reconsider their approach and integrate this advanced technology in their business model.
Today, it becomes essential in the management processes improvement, through better understanding of the environment and customers’ needs, optimising costs and increasing risk analytics.
AI offers various possibilities to promote sustainability and inclusiveness in the Arab insurance industry, which should significantly change the operating way of the insurers, by offering customers insurance products closer to their needs and using efficient algorithms in analysing risks including geographic, meteorological and socio-economic data specific to Arab countries.
Scenario planning offered by AI is essential for understanding the potential consequences of natural and man-made disasters and setting up adapted approaches to each scenario. This important added value would promote more accurate pricing, thereby encouraging a more sustainable approach, by reducing claims losses.
AI can also be used to anticipate and detect fraud practices in compensation claims, which helps reduce fraud-related costs and companies’ losses. In addition, insurance companies can even use AI for monitoring internal operations, particularly those related to premium collection and claims settlement.
- CASH Assurances CEO Wided Belhouchet
The Arab insurance market can use AI in many aspects of the insurance day to day business One of the most important areas is to balance between growth and profitability. Hence, AI pricing models can monitor the competitive positioning and assist in the data preparation especially when it comes to customer behaviour.
This will allow the companies working in the Arab markets to optimise pricing processes and simplify workflow while keeping an eye on the profit margin in each segment of the portfolio and ensure sustainable growth.
AI can provide the Arab insurance market with capabilities to analyse vast amounts of personal data, better capture risk factors, individual preferences and behavioural patterns. AI can easily calculate the probability of a risk occurring at the level of the individual and allow the insurance inclusion of such an individual.
- Insurance Federation of Egypt chairman and GIG Egypt CEO Alaa El Zoheiry
AI’s risk assessment and pricing utilising capabilities can assist Arab insurers in analysing a vast amount of data to better assess risk associated with environmental factors such as climate change.
Arab Insurers can also customise personal insurance products to meet ever changing customer needs, making insurance available to more demographics and community segments. AI can be taken to another level helping insurers combat fraud utilising AI powered fraud detection solutions.
Other areas that can utilise AI like claims processing and customer service such AI chatbots and virtual assistance. By harnessing the power of AI in these areas, insurance companies in the Arab World can contribute to sustainability and inclusivity.
- GIG Jordan CEO Ali Al Wazani
AI is beginning to influence Arab insurers in many ways. The importance of data analytics and machine learning is being introduced in product lines like motor and health insurance which is the fastest growing product line that has a significant impact on its P&L. These product lines comprise a large share of an Arab insurer’s typical portfolio. Increasing reliance on data and availability of technology tools is helping the insurers to underwrite and price their products better which will lead to operational profitability which has been the bane of insurance industry.
Areas that will benefit range from lower OpEx, risk assessment, effective customer service, fraud detection, preventing accidents and judicious use of natural resources.
By enabling insurers to understand customers’ needs better, AI will help them create new products that are highly attractive to new segments in the market, particularly for individuals and businesses that were not properly targeted by the sector in the past. Through AI, companies will also be well placed to manage their environmental responsibilities in usage of energy, transport, office air-conditioning and many other areas which enables them to improve their carbon footprint while reducing costs.
All these advances will improve the sustainability of businesses within the sector, allowing them to offer more streamlined, responsive and tailored solutions at more affordable prices.
This will in turn accelerate the trend that is already underway of bringing growing numbers of customers into the insurance tent. Penetration remains low in the Middle East by international standards, leaving too many families and companies vulnerable to adverse events. Top tier insurance companies are committed to finding innovative solutions for all types of customers for their mutual benefit.
- Watania Takaful CEO Gautam Datta
As the CEO of an insurance broker, leveraging AI for sustainability and inclusivity is paramount. AI enables precise risk assessment through data analysis, allowing us to develop insurance products that incentivise environmentally conscious behaviour.
Personalised pricing, driven by AI algorithms, ensures fair rates for diverse customer demographics and fostering inclusivity. The adoption of innovative AI-driven products, such as usage-based insurance, aligns with our commitment to meeting the unique needs of each client.
By embracing AI, we not only enhance risk management but also contribute to the development of a sustainable and inclusive insurance industry in the Arab region.
- ACE Gallagher Holding CEO Yolla El Khoury
Arab insurers can leverage AI to enhance sustainability by implementing predictive analytics for risk assessment, thus promoting eco-friendly policies. This is besides AI-driven customer insights with tailor-made inclusive insurance offering to meet key steps for Arab insurers which include adopting green practices, integrating AI for accurate risk evaluation, designing inclusive policies, fostering diversity in their workforce and collaborating with communities to understand unique needs of stakeholders.
The conclusion of COP28 in the UAE last year marks a significant turning point in the insurance industry, emphasising the integration of sustainability and technology, steered by ESG principles to exemplify how integrating ESG principles with technological innovations is crucial in forging a sustainable future for insurance.
As part of the CBUAE’s regulatory initiatives, they produced a consultation paper for the proposed principles of sustainability for the UAE insurance market. With the same principles, a number of other Arab countries have done the same.
- Emirates Insurance Association secretary general Fareed Lutfi
We are likely at the beginning of an age for AI, but systems are currently less predictable than ever before. As such, it’s important that individuals act diligently to ensure that AI operates sustainably and inclusively when processing data.
The Chartered Insurance Institute published guidance in 2021 on how to limit data bias when using AI, thus promoting sustainability and inclusivity. The guidance relates largely to an organisation’s culture and governance, and ensuring AI processes align with overarching strategies and regulations.
The guidance includes:
  • Adopting a three-level approach, looking at the data itself, the algorithms being used, and the practices for managing and overseeing.
  • Considering the processes, a firm is using to assess and implement AI into the decisions it makes.
  • Introducing a monitoring framework to ensure adherence to legal and regulatory obligations, including those related to gender, race, and disability.
  • Implementing tools for the analysis of historic data that can identify any evidence of discrimination.
  • Ensuring those managing and overseeing AI receive regular training on ethical issues and developments associated with it.
  • Making sure that business partners and suppliers join this initiative. This means carrying out thorough due diligence on all suppliers and refusing to excuse them of their responsibilities.
- CII MEA regional director Gaenor Jones
Over the course of the last few years, significant steps have been taken by the insurance industry to digitise the insurance business in the Middle East region. The increased use of technology to underwrite risks and manage the claims process has led to a shift away from paper-based processes and has helped to promote sustainable practices. The next phase of that transition is to implement AI tools to further accelerate growth and efficiency in a sustainable and inclusive way.
Arab insurers can use AI at the underwriting stage in assessing risk, eliminating errors that can occur from a human process and flagging fraud issues. At the claims stage, AI can be used to automate the process to enhance sustainable efficiency.
AI is particularly beneficial for consumer lines, but also specialist products such as climate and parametric insurance solutions. In terms of promoting diversity, AI can be used by Arab insurers as part of its recruitment tools to help remove unconscious bias from recruitment processes and to target diverse or under-represented candidates as fairly as possible. Generative AI can also be used to create insurance products which meet different sustainability, environmental and social objectives.
- Norton Rose Fullbright (Middle East) partner Shabnam Karim

The state of Arab insurance markets today

In its 60th year, the General Arab Insurance Federation continues its mission of supporting growth in Arab markets while playing its role in achieving an integrated and developed regional insurance industry.

By Osama Noor

 

The Arab insurance industry has kept pace with the development witnessed by many countries in the region and it has also formed a pillar of guarantee and protection for other countries where development is moving at a slower pace.

In general, it can be said that the stability and steadfastness of the Arab insurance industry in the face of many economic, social and political challenges is a major achievement for companies, regulatory bodies and other institutions operating in the insurance sectors in the region, said General Arab Insurance Industry (GAIF) secretary general Chakib Abouzaid.

“However, the Arab markets still have a lot to do in order to raise the level of the insurance industry and place it in the ranks of the developed countries, in which insurance contributes to an acceptable extent to their economies; yet, it is fair to say that some Arab markets have made significant strides,” he said.

Growth factors

Mr Abouzaid said that the Arab insurance industry is evolving in a very positive manner, it is still dependent on factors that include the geopolitical situation, the economy in oil and gas producing countries versus non producers and the insurance legal framework.

“The geopolitical situation in many countries is impacting six economies and their neighbours in the region. The war on Gaza has almost paralysed the Palestinian economy and impacted Jordan and Egypt. Moreover, sanctions on Syria are preventing any foreign investment or funds transfer,” he said.

As for the insurance legal framework, it has evolved in many countries in the past years, he said. “The regulators are now either independent authorities, such as Egypt, Morocco and KSA recently; or operating under the umbrella of central banks, including Bahrain, Jordan, Qatar and UAE. The takaful framework has been adopted in many countries like Morocco and Algeria; whereas there is a new insurance act being discussed in the parliament in Egypt.”

GAIF keeping pace with progress

GAIF is actively pursuing the digitalisation of its operations and realising the importance of technology in developing and progressing the Arab insurance industry, said Mr Abouzaid.

“We have finalised the digitalisation of the GAIF Orange Card and we are currently working on the claims module, intimation and processing. The long-term objective is to create a body, a pool or syndicate to manage the Orange Card and reduce the delays of payments. This is a strategic project.”

He said that there are other ambitious projects and initiatives that will make a notable contribution to the development of the insurance industry in the region. This includes the Arab Nat CAT initiative.

“We hope for the markets to react positively to our proposal to launch an Arab pool that caters for the needs of protection against the risks emerging from this area, which are increasing in effect and frequency.”

This year, GAIF’s 34th General Conference in Muscat will witness the presentation of a new set of bylaws to strengthen GAIF corporate governance and to align its internal rules with the Arab Unity Economic Council requirements, said Mr Abouzaid.

“More importantly, we will be celebrating GAIF’s 60th anniversary. The Muscat conference, held with the theme ‘Sustainability and Inclusivity in the Arab Insurance Industry: How Arab Insurers Leverage the Artificial Intelligence Revolution’, will be an important milestone and confirms the role this organisation plays in supporting development of the Arab insurance markets which hopefully will see further growth in the future.

“Other than that, GAIF will continue working based on the objectives and roadmap approved by its board of directors and to keep our members and insurance professionals updated on the recent developments on the global and regional markets.”