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People in UAE should think beyond motor insurance

Noor Takaful, the Shariah-compliant insurance brand of the Noor Investment Group , was launched during the financial crisis, and it aims to become the leading player in the UAE takaful sector in the next five years. Far from being daunted by the crisis and its after-effects, Noor Takaful CEO Parvaiz Siddiq said: "It was a blessing in disguise" for the insurance industry.

Talking about the prospects of UAE insurance business and takaful, Siddiq said: "We need people to get excited about the insurance sector." This would mean making people think beyond motor insurance and look at home insurance, too. "Educating consumers is one of the most exciting challenges," he added.

How has the financial crisis affected the insurance sector in the region?

The financial crisis was a blessing in disguise for the insurance industry. It allowed the insurance industry to focus [again] on the core business of underwriting and making profits.

How do you see insurance firms' recovery from the losses made during the crisis?

They have to recognise all the losses. Once the losses have been recognised, they need to rethink their investment strategy they want to follow in their business. The companies affected by the crisis will have to look at asset allocation and investment strategy.

Is the insurance sector in the UAE poised for consolidation? If yes, how soon can we see M&As?

The UAE has more than 58 insurance companies, including takaful firms. Given the size of the UAE market, there are too many players. We expect some mergers and acquisitions. How soon is difficult to say. We have to see which company wants to merge and acquire another one.

Is Noor Takaful also considering an acquisition?

No. We are relatively new and our focus is to grow in the UAE market, organically.

What is the size of the UAE insurance sector, takaful in particular?

It is expected that as at the end of 2009 [though official data has not come in yet], the size of UAE insurance business would be Dh19bn and takaful would be around Dh1bn. In 2008, the UAE insurance sector was pegged at $5bn (Dh18.36bn) and the takaful business was around $220 million.

What do you think of regulations in the UAE insurance industry?

We do not have any limitations, as such. The insurance authority here is very proactive. The regulator is allowing structures to be in place.

Do you think consumer awareness is an issue here?

We need people to get excited about the insurance sector. Mostly, motor insurance sells here. There are lots of homeowners in Dubai and the UAE. We have to encourage them to buy insurance. Educating consumers is one of the most exciting challenges.

What would be the product-wise break-up of the UAE insurance industry?

In the UAE, more than 60 per cent of the total business is motor insurance and around 20 per cent is medical insurance, and the rest will be divided among others.

In which market segments do you operate? What are your new offerings?

When we were formed, the new law was there and we needed two separate licences. We have two companies - Noor Takaful General and Noor Takaful Family. We are on the verge of launching long-term life insurance products. We are officially launching a unit-linked product in the next couple of months. Noor Takaful General offers all general insurance products.

Is there a demand for unit-linked products in the UAE market?

There is a substantial market for it. We need to pitch the products to the right kind of customers. The consumer, if he wants to pay a minimum premium Dh200 a month, can take insurance products.

Is bank assurance the way forward for distribution of insurance products?

We have bank assurance tie-ups with the Noor Islamic Bank and the Sharjah Islamic Bank . We are in talks with various other Islamic banks for tie-ups.

What strategic changes do you see in Noor Takaful after the global crisis?

Noor Takaful, being a fairly new company, was not affected. Fortunately, we were launched during a period when it was a full-blown crisis.

Do you think the worst is over?

Yes, there are signs of recovery. I believe 2010 to be a very positive year.

Where do you see Noor Takaful in five years from now?

Our target is to grow into a major takaful player.

As of now, Dubai Islamic Insurance is the largest takaful player in the UAE, while Salama as a group is the biggest takaful player in the world.

PROFILE: Parvaiz Siddiq Chief Executive Officer, Noor Takaful

Siddiq has 24 years of diversified experience in the insurance industry in Pakistan, Saudi Arabia and the UAE.

He started his career in 1983 with Adamjee Insurance Company, the largest insurance company in Pakistan. Before joining Noor Takaful, Siddiq was general manager of Salama-Islamic Arab Insurance Company, the largest takaful and re-takaful group in the world. Siddiq has an MBA degree, and is a fellow of the Chartered Insurance Institute, UK, and an associate fellow of the Institute of Islamic Banking and Insurance, UK.

By Piyush Pandey

© Emirates Business 24/7 2010