Monday, Jul 11, 2011
Gulf News
Dubai Unlike in banking, Sharia-based insurance products and services are still trekking up the steep incline of consumer acceptance in the local market.
But over the last two years, the marketplace is starting to see some quite innovative products being served by these takaful companies.
It has helped spread the message faster among the intended clientele, including, interestingly enough, among non-Muslims on the individual side.
On the corporate side, takaful insurers have made much more headway than at any point in the recent past, and particularly so on the group medical and life lines.
Now, takaful companies are making a pitch to gain acceptance for its unit-linked products, by way of which clients would consider this option in relation to their investment needs.
In this light, Takaful Emarat — which came into being in 2008 and went into full operational mode in early 2008 — has been busy marketing a slew of new funds. Now, it is ready to get to the next level and Gassan Marrouche, the general manager, explains how.
Gulf News: The market talks of the need for local Islamic insurers to come up with their own products created in-house. Is Takaful Emarat ready to do that?
Gassan Marrouche: Our shareholding structure represents a nice balance between East and West, with the UAE national company Al Buhaira having been in the market for long, and the western expertise brought in by Austria’s Uniqa Group.
It’s the mix that makes us unique, by adding an eastern flavour to western ideas. This is not just to impress but actually make it work to the advantage of the client.
It does not mean we are bringing in products from abroad and making them available in the market. We are a market oriented company and not a product-based one wherein we bring in products and try to hard sell them.
Mind you, we launched the life assurance products only in April. Hopefully, in two to three years our individual life can become a large component.
But what about having your own products?
We are not in the financial consultancy business, but in insurance. There are 31 funds currently available through us offering low, medium and high risks.
Investors can look at the track records of these over five years and make an informed decision the risk profile they want to assume. We have NCB Asset Management helping us on the funds.
But we are looking at two more funds that are our own. We are awaiting approval from our board.
In the next few weeks, we will be able to meet with them and explain the fund’s objectives. It may take three months before the funds are live. They have been made for us, but as the fund managers we will have two banks.
Are the funds capital guaranteed?
We had so many clients asking what’s so unique about takaful products? Aren’t they just the same as conventional products?
In conventional, there’s some guarantee, while Islamically speaking it was either you make it on your investments or lose them.
Now we have a fatwa that allows offering guarantees. We will have one fund that will offer 90 per cent and these are savings products. We aim to be among the leaders in this category and the two products will consolidate our standing.
What about your medical insurance line?
On medical, we have introduced a second opinion benefit free of charge. There will be many clients who would think getting two consultant opinions are better than one.
You have situations where a doctor would say you have to go for a medical procedure and you are forced to. There are instances when doubts are created as to whether this prognosis is more of a commercial decision.
By offering a second opinion, we are giving clients an option. It takes advantage of the fact that we have fantastic local healthcare expertise which can be relied upon. Then there’s Uniqa, which has for so many years been operating in life and medical in many European countries.
We can tell clients to send their reports and it will be sent to our experts. We can give them a benefit without them having to pay on travel to seek a second opinion. But the final decision will be the client’s.
We are testing this and getting enough support from Uniqa. If future demand is high, there will be a time when we may need to place a charge for it.
Is your group business much higher than the individual?
I cannot get into specifics, but it is because the premiums are also higher than in individual. It may take five or six years, but our savings products could become much bigger.
In a unit linked product, you are talking about protection and savings. There is a reasonable amount of money going to the beneficiary in case of an unforeseen event.
We no longer worry about dying too soon because of the advances in medical sciences. We should now be worried about living too long.
If people are interested in stocks, we have funds run by asset managers. We have a range of funds Islamically certified by a Sharia board. You can invest in stocks on your own or you go through an insurance product that will take care of your beneficiaries should something unforeseen happen. There are guaranteed funds with high, low or medium risk profiles depending on investor preferences. It’s your choice.
There’s a sentiment in insurance industry circles that takaful companies are intent on buying marketshare. Do you agree?
You can buy market share on life insurance protection and savings plans, but on medical such an approach would be suicidal. We did not wish to renew certain clients because the loss ratio was too high.
Yes, we are in the risk business and have been entrusted by our shareholders and participants to take certain risks. But that’s not the same as saying we will take on suicide missions.
For instance, the total medical-related claims racked up by a corporate client in a year totalled Dh1.7 million. I agree there is medical inflation every year, but a competitor took on the company’s business for Dh1.5 million. It just does not make sense.
Fortunately, medical offers a good cashflow for insurance companies now. What will happen a year or two from now, they are not thinking about it.
But I am being choosy about our clients so that the company can make money and for our retakaful partners to do so as well. If I have a liability I have to make sure it’s managed well enough.
We have come across some situations where the insurer has quoted less than the reinsurance rates. This is not helping and giving the wrong impression to the public they can get away to just go out and claim. There are medical bills being issued for Dh2,000 or Dh3,000 for a common cold, where in the past people would have made do with drinking hot chicken soup and drinking lots of water.
Insurance companies need to cooperate with each other as medical claims are running into Dh2 million and more.
On the group side, what’s your strategy going to be?
We are looking at small- and mid-sized businesses; the big schemes everyone can jump and on it. We are growing and it may be some time before we can compete for the huge clients.
Any plans to raise fresh capital? What about new markets?
Our paid-up is Dh150 million and for the time being I don’t see any need to change that.
Of course, we will look beyond the UAE. We are building the best model for Takaful Emarat to be successful in the UAE and the same can be applied to other markets when we want to go there. We can expand into the GCC, the Levant, North Africa and even Asia.
Any expectations on when mandatory health insurance will come into effect in Dubai?
There are many in the industry who are looking at it possibly by the year end or early next. In Saudi Arabia, where I have worked, health insurance was brought into effect in phases. But that was a market where there were just over ten insurers.
Here, that’s certainly not the case with more than 40 players in operation. The entire process can be speeded along to suit everyone’s interests.
By Manoj Nair?Associate Editor
Gulf News 2011. All rights reserved.
