Insurance is good for an economy. It is as simple as that. By being insured, that is by dedicating between 3 and 10 percent of their gross domestic product to financial care and protection of life, economic stakeholders in developed countries globally manage risk and prepare for problems arising in any situation – from earthquakes, floods and other natural catastrophes to manmade perils and plain old needs for health care or the accumulation of capitals for times of needs.
In the estimate of Swiss Re Sigma, a research institution affiliated with large global reinsurer Swiss Re, global real premium income is forecast to rise by 4 percent in 2016 and 4.2 percent in 2017, with emerging markets as the main driver. According to Sigma, insurance in the Middle East and North Africa region (MENA) is expected to witness a strong improvement to 8–9 percent premium growth in real terms. The outlook for life insurance in MENA is for insurance to benefit from the region’s “robust economic development and favorable demographics” but the reinsurer also noted that life insurance on a regional level – including Pakistan for the purpose – is low in the region comprising the Middle East, Turkey and Pakistan (METP) at 16 percent of total premiums in the METP region. To realize the potential for growth, stringent and comprehensive regulations as well as utilization of technical tools and Takaful – insurance systems in compliance with Islamic law – are needed.
Since the middle of the last century, the insurance industry in the Middle East has been a part of the equation, taking the much older concept of mutual protection to new heights. Risks change, however, and insurance needs to adapt to new practices – such as digital distribution and cyber insurance – and to new challenges related to issues as diverse as the human impact on climate and the aging of our societies. To address changes and challenges, bright minds in regional insurance have over many years teamed up with international experts in events such as the biennial large conferences of the General Arab Insurance Federation (GAIF).
[pullquote]Lebanon has been a pioneer in the development of insurance services and skills – from actuarial knowledge to underwriting and marketing – in the Middle East[/pullquote]
Lebanon has been a pioneer in the development of insurance services and skills – from actuarial knowledge to underwriting and marketing – in the Middle East. It is the host of GAIF this month. As such, the country plays an integral role in the rollout of services for insurance and in discussions of the challenges that regional insurers should tackle over the coming years. However, GAIF is often also a political event and is exposed to the internal politics of the sector and to the politics of Arab governments. This is reflected in the program and composition of GAIF.
In 2016, for example, Executive has found only a handful of GAIF registered delegates from the largest economy in the MENA region, Saudi Arabia. Out of nearly 1,300 participants who registered one month before the event, only 5 percent were shown as originating in their work identities from the three Gulf countries of Kuwait, Qatar and Saudi Arabia.
Saudi Arabia has just published its vision (2030) to turn the kingdom into, among other things, an economic hub and global investment powerhouse. This vision promises a “tolerant country with Islam as its constitution and moderation as its method” with “healthier employment opportunities for citizens and long-term prosperity for all.”
The future envisioned by Saudi planners – and that is importantly not some foreign product of hapless civil-society people but is based on holy writ and identity and introduced by the royal chairman of the Council for Economic and Development Affairs, Muhammad Bin Salman Bin Abdulaziz Al-Saud – will include increased room for economic development of SMEs and commitment to education, health, housing resources, such as mortgages, and becoming “a leader in competitively managing assets, funding and investment.”
That is good news for insurance, which has an integral role not only in investment, financial markets and risk anticipation but also in all areas where governance and transparency are prioritized. One can take events and conferences such as GAIF as rituals or as possibilities to innovate in an area that is of vital importance for this region, all the more as improvements in insurance profitability in developed markets will remain subdued by pretty much every expectation. Executive stands with the call for improved collaboration in the insurance sector of the Arab world, whether in the area of regulatory stringency or in the development of our products, services and financial markets. All should work together.
