Jason Light

What classifies as sound underwriting principles for your business?

Sound underwriting principles are those that are based on real experience of the particular client you are insuring and the general experience of clients like him. Most of all it is about being guided by your statistics and your experience rather than your ego. In many business sectors you will have heard the phrase: top line is vanity and bottom line is sanity. That is so true in insurance. In most sectors when you make your product you know what it cost to manufacture and then to distribute so you can make some reasonable estimate of your margins. Normally once you have sold the product that is, more or less, the end of your exposure to the transaction. Insurance does not work like that. Really we sell a promise and it is a promise that is delivered over at least a year and sometimes longer. It can take a very long time before we know whether the price we charged was adequate for the risk we took. Insurance companies often go wrong when they get too focused on turnover and market share at the expense of profitability. I am proud that our company has grown in a disciplined and controlled way. Ten years ago we were the ninth largest in the country and now we are the second largest in Abu Dhabi. More importantly we have been one of the consistently profitable companies in the market. We have achieved that by the application of sound underwriting principles.

How is the oil price affecting your business?

Insurance policies are generally sold annually so you there is rarely an exact correlation between economic indicators and the insurance industry, but really that is just a timing issue. So in 2015 we did not see much impact from the downturn in commodity prices in our insurance business though of course it did affect our investment business. I am sure we will see some impact in our core insurance business this year, however. Our company has a historically strong relationship with the construction sector, and obviously there are less new construction starts right now and thus demand for construction insurance will fall. Motor insurance represents around 30% of our business. New car sales are down somewhat and used car prices are falling – that will certainly affect us. But people still have businesses, buildings and cars and they still have to insure them. Therefore, although we might not be seeing dramatic growth, we will not see a collapse in demand.

What products do you have that could cater to the development of Abu Dhabi?

We are very proud to be an Abu Dhabi company. Ten years ago about 85% of our business came from within a 10km radius of our office. Today, our overall book is of course three times larger than it was then. That is because as a local company we understand the needs of local customers. Our domestic business is still about 80% of our portfolio and it is split about 60-40 Abu Dhabi/Northern Emirates. We have also created an international insurance business that writes reinsurance from Africa and Asia. In new developments at home this year, we have been launching a product that provides specialized insurance to high net worth individuals. Despite the fact that there are a lot of very wealthy people, both locals and expatriates, in this country the local market has not really addressed their particular needs. These customers have, by definition, a lot of assets to insure both at home and abroad. The segment is rather underserved in this country so we have created a new unit to better meet their higher service requirements.

How are you curating the company’s strategy to expand?

I like the idea of curating because it implies that you have to take great care of your company—something I strongly believe in. Our primary objective is to make a profit from insurance. To do that you have to employ the right people and be both very supportive and very disciplined in what you allow them to do. We spend a lot of time trying to identify the type of business we want and then going for that rather than simply reacting to what comes in the in tray.

How would you evaluate the new legislative framework?

The new regulations coming in are really the big story in the market this year. I have heard them described as a sort of Solvency II –lite and I think that it is a pretty fair assessment. The regulations will affect our whole enterprise risk management as well as our investment policy. There will be a lot more reporting and a lot more external validation by actuaries and auditors. The regulations are pretty sensible and they do not frighten us – though of course they are costly to implement and will involve a lot of management time. The regulator is on record as saying that there are too many companies in the market and I believe the new regulatory requirements should drive some merger and acquisition activity. Overall though insurance is one of those industries that can only thrive with a certain amount of regulation so we welcome the developments and will do our best to comply.