Because we know it’s easier said than doneMay 28, 2015 9:53
Interview: Omer Hassan Elamin, Orient Insurance
Orient’s Sr MD Omer Hassan Elamin says more players in the market is a clear indication that things are not going in the right direction.
May 24, 2011 4:34 by kippreport
When Omer Hassan Elamin talks about the insurance industry, he does it with the authenticity that comes with being in the industry for almost three decades.
As Senior Managing Director of Orient (formerly Arab Orient Insurance Company), Elamin has taken his organisation to new heights. The company, in fact, has accounted for 20 per cent of the total profits of the local insurance companies last year.
Policy spoke to Elamin to get an inside view of the insurance industry in the UAE.
Q: Is it time for consolidation?
Actually, hope is in consolidation, although I don’t think we have the will nor do we have the desire. I have been in this market for almost 30 years and my dream is to see consolidation take place. It’s definitely in the best interest of the industry and will create smaller number of companies.
Q: There are two more companies coming to the market. Will this usher a positive change in the sector?
I don’t think having new insurance companies in the industry can be beneficial. Many of the companies that were established in the past four years are struggling now. They have not been able to generate premium and profit. Some of the companies, especially the new ones, are working with equities less than their capital. That is a clear indication that things are not going in the right direction.
Q: In such a scenario, what kind of regulation do you expect must be executed?
Regulators are in the right direction. The Insurance Authority has issued three draft regulations. One of them is for the reserving policy which is aimed at ensuring that the companies are properly reserved. The second is regarding investment policy.
The good thing about this is that it is not going to leave the investors’ money and the shareholders’ money as well as the policy holders’ money at the mercy of certain individual decisions.
Q: A rate war is going on. Do you think it is going to intensify?
We have this saying: “What’s the harm to the goat if you skin it after slaughtering?” Now the goat is dead already. I think the market has reached a stage if the rates go down another 10 per cent or 20 per cent, it will not make much of a difference. What is happening now is that most of the companies are buying business at a loss. It is not going to do well for the whole market. If you look at the financial statements of the companies for 2010 you will find that many have seen a substantial drop in their technical profit. This is just a beginning. If you have difficulties with technical profit, you are having problem with investments because options for investment channels are limited.
Q: Let’s talk about the question of liquidity crunch in the market.
That’s another issue. It is difficult to collect premiums from clients. We are facing problems in collecting premium from the brokers. Some brokers have already collected the premiums and some have used them in their own investments or invested in property, or invested abroad and their investments did not do well. This not acceptable. How can they collect the insurance companies’ premiums and spend the money as their own and gamble and invest?