The Business Year

The government and insurance companies are working hand in hand to raise public awareness regarding the importance of insurance and uplift the entire sector.

Elie Abi Rachid

CEO, Chedid Re

We established our physical presence in Saudi Arabia in 2010. Prior to that, we had been working with Saudi clients since the company was founded in 1998. Having a presence has great advantages for our clients. As a broker, we offer reinsurance services to major companies around the world, rated by creditors with a minimum of BBB. Saudi Arabia has already proven to be a key market for us and is by far the largest. We aim and expect to grow our operations to become the leading reinsurance broker and offer our clients a wide range of tailored services addressed to their specific needs. Our challenge is to continue to enhance our value proposition to insurance companies so we can be at the forefront of the industry. The Saudi market deserves the best of what is available in terms of technical expertise, and we believe we have an important role to play in assisting a professional and profitable insurance industry. For Saudi Arabia, we have the exclusive rights for Lloyds, one of the world’s leading reinsurance firms. In terms of growth, technology is playing an increasingly important role. We are actively developing applications for our operations. Together with our partners we are developing an interface through which we can digitalize and further enhance interaction with our clients. Technology is the way forward. Since we are brokers, this should be a joint effort with our clients, but we are glad to take a leading role.

Andreas Brunner

CEO, Allianz Saudi Fransi (AzSF)

The Allianz Group is in 70 countries with around 150,000 employees and an annual operating profit of around USD10 billion. We are always looking at markets with huge potential, and Saudi Arabia is one of them. Saudi Arabia has about 35 million inhabitants, of which 20 million are Saudi and the rest are expatriates. Moreover, around 70% of the population is under 30 years old. The Kingdom has good physical and IT infrastructure, so for us it is a very good market with huge potential for growth and profitability. This is somewhere we can bring the best-in-class services we have developed all over the world, and scale it quite fast. AzSF is one of around 35 companies in the insurance sector that has always managed to be profitable in recent years in a very stable and sustainable way, even when the economy was declining. For us it is always important to have a product portfolio view while remaining vigilant about our clients’ needs. In terms of portfolio, automobile insurance is the second biggest category, at about 35. It is also about bringing in training and innovation to Saudi Arabia, such as telematics. The market penetration of life insurance is below 1%, even less than the UAE, where it is already above 2%. We see a lot of opportunities, especially when you think about the young generation’s need to save on a sustained, long-term basis. Therefore, savings, income protection, and retirement insurance are some of the customer demands we are watching.

Abdulaziz Abdulkarim Alkhereiji

Managing Director, Abdulaziz Abdulkarim Alkhereiji

Rather than an economic slowdown, we are seeing a structural change in the Saudi economy; we are noticing different behavior from our customers, in a positive way. Despite all these changes, 2018 was the most profitable year for Chubb Arabia since its inception 49 years ago. But revenue-wise, we still seek to improve. At the core of our new strategy lies the desire to expand our portfolio and customer base, looking at what products and lines of business suit the Saudi market and developing new innovative solutions rather than relying on more traditional lines. For example, we signed an agreement with Flynas, a major aviation company in Saudi, to provide online travel insurance. We also have a project under process regarding life insurance. We were traditionally a B2B company dealing with corporations and not individuals, but we are now entering a more client-oriented retail market. In order to successfully embark on this transformation, we are trying to build a digital distribution platform alongside our products to follow up on the way it is delivered. For Saudi Arabia, 2019 will hopefully be a year of digital transformation. We are looking at the entire workflow process and aiming to digitalize it as much as possible to improve the customer journey and promote as many projects as possible. However, it will be another tough year for the insurance industry, and to remain ahead of the game we need to start educating ourselves on new lines and new market trends in insurtech and fintech.

Ehab Linjawi

CEO, Gulf General Cooperative Insurance

The insurance industry should work on raising public awareness regarding the importance of insurance, develop new products to cater to future needs of customers, and continuously enhance both communication and service delivery channels. Another major challenge is a lack of human capital; we need to develop and train Saudis to manage the industry in the future. The third challenge is the financial strength of insurance companies. Moving forward, IT will have a great positive impact on the insurance market. Digitalization is a key pillar in the success of any financial or services company. The insurance sector has made major leaps in digitalizing sales channels and claims management, but there is still a long way to go. The regulator plays a major role in the success of the industry and I see a strong willingness from regulators to support the industry to conduct business at a high level. The objective is to have large and well-capitalized insurance institutions that can absorb the risks associated with economic cycles, offer outstanding services, continuously develop and enhance product offerings, and develop local talent. Personally, consolidations and mergers are one way to achieve this objective.

Samer Ali Alfayez

CEO, Elite Insurance

Contributing less than 2% of the country’s GDP, the Saudi insurance sector is a relatively new market, with two major companies controlling a major share of it. In 2015, the market was worth almost USD8 billion, and that growth was a result of the change in regulation in 2013 that made certain lines of insurance mandatory, namely medical and auto. Over the past two years, there has been 2-3% growth in the medical segment, and we now see companies regaining profitability; however, unless new products are announced, there will still be space for growth, though not as high as one may wish. Elite Insurance seeks to align itself with major projects currently being undertaken in the Kingdom and support Vision 2030 to benefit from it in any possible way. The old-fashioned way of working in Saudi Arabia needs to change; before, returns on investments came mainly from the stock market and properties, which is no longer the case. Regulations will play an important role in determining the direction of Saudi Arabia’s reinsurance industry, as it currently faces challenges with rankings, and some companies have exited the market. Germany traditionally boasts the most advanced reinsurance service providers. The more regulations and contributions there are from the government, the higher the premium will be. Despite a negative 2018, there was 2.5% growth in the sector, and retention rates went up as well. We hope 2019 will come with new projects as more companies invest in the country. In 1Q2019, things will truly start to take off.

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