MUSCAT -- Insurance industry in the Gulf Cooperation Council (GCC) countries should bring in new legislations, stringent transparency norms and make use of information technology to develop a vibrant sector, said an industry expert here yesterday. Addressing the third annual Gulf Insurance Forum, Shaikh Faisal Khalid al Qassemi, Chairman of the Executive Council of GCC Insurance and Reinsurance Companies, said the challenges faced by the insurance industry should be addressed collectively by the member states.
Emphasising on bringing in new discipline in regulating the sector, he said new corporate governance measures are needed to safeguard the interest of the general public. "In order to achieve these goals, proper financial and auditing tools as well as transparency norms have to be introduced," added Al Qassemi, who is also the Chairman of Emirates Insurance Association. He said the growth potential of GCC insurance industry is tremendous and the players should develop suitable investment portfolios. the Oman Daily Observer and Oman Arabic daily are the exclusive media sponsors of the two-day event held at the Grand Hyatt Hotel.
Nasser bin Salem al Busaidy, President of Oman United Insurance Co, called up on Arab insurance companies to strengthen their financial position either by enhancing capital base or through mergers. Al Busaidy added that the insurance industry in the Gulf region has not grown in line with the aspirations of the member states. Several local companies are facing severe competition in the aftermath of opening up the sector for foreign competition.
Bancassurance has considerable advantages over the traditional means of marketing insurance products, noted Murtadha M J Ibrahim al Jamalani, Adviser at the Oman Qatar Insurance. The banking sector is well-placed to identify new products before the traditional insurers are even aware that they missed an opportunity. The strength of the distribution channel will help to achieve better sales with the same budget on sales promotion. Bancassurance can also offer better service-oriented culture of a bank without compromising on the distribution of the efficiency.
Also, branch space can be used for advertising insurance products, which enables publicity with little marginal cost. Strong customer relationship is another advantage for marketing insurance products among bank depositors. However, he said, bancassurance business has failed to capitalise on enormous opportunities. This can be attributed to the problem in integrating sales drive into banking environment. Also, offering a consistent set of investment products can be difficult because of the overlapping between some banking and insurance products. The size and complexity of banking group may make decision-making process slower than a traditional insurer. Bank's information technology department tends to have a poor understanding of the difficult requirement of an insurance provider.
By A E James
© Oman Daily Observer 2006
