Cyclone Gonu has not only changed risk perceptions but also forced a change in strategies on part of insurance providers. OER checks out the plans of AXA Insurance
If an insurance agent had asked us some three months ago to take out cover for storm, tempest and flood (STF), we would retorted why waste money. Storm and floods in Oman? No way. But when Cyclone Gonu struck, it not only changed the way that people looked at insurance but also the way the insurance companies undertook their operations, specially when it came to motor insurance.
"Gonu has definitely changed market dynamics. Clients are now aware what STF means in motor comprehensive insurance and are examining their policies to be sure that they have such cover. Insurance premiums are increasing, but not enough due to competition and the desire of insurers to capture/ increase their market share," says Deepak Kamath, area manager, Oman, AXA Insurance (Gulf). In its aftermath, Gonu has also thrown up several challenges.
The immediate challenge, post-Gonu, is to settle claims, which run into millions of riyals for each insurer. Whilst most of the individual claims for motor, home and travel have been settled, the daunting task of disposing vehicle salvages is not yet over. The larger corporate claims are now getting finalised and these are big ticket payments. "We expect that most corporate claims will be settled by September-end," says Kamath.
The longer-term challenge for AXA Insurance is self-discipline to insure on a sound underwriting basis and charge adequate premiums. Reinsurers have suffered the most and hence will raise prices and impose tougher conditions on insurers, which inevitably will be passed on to the direct customer. With the looming threat of more storms and floods in future due to changing weather patterns, it is going to be difficult for all concerned.
Post-Gonu strategy
So what will be the company's strategy post-Gonu? "AXA's strategy has not deviated. We want to be the preferred 'employer' and the preferred 'partner' and are working towards these objectives. Our ambition is to be a market leader and we are on target to achieve this. We believe in offering good products, with easy to understand language, advise clients appropriately, deliver excellent service and charge a fair price," asserts Kamath.
"Basically, in the GCC countries there is low penetration of insurance for both life and general products. This is an exciting market with its unique blend of emerging market status and a well-developed infrastructure - an ideal mix for any service provider. AXA Gulf's strategy is to increase awareness of the need for insurance and help the public at large to adequately protect their families and assets. We see a great future for AXA," affirms Andrea Rossi, CEO, AXA Insurance Gulf & Middle East.
On its part, AXA is not new to the region-it has been here for over 50 years though under different names- Norwich Union, Guardian Royal Exchange, AXA Insurance Plc before the merger with Norwich Union Middle East led to the creation of AXA Insurance (Gulf). Even in Oman, it can trace its roots back to 1971.
"Merging with an insurance business that had been operating in the region since the 1950s has enabled AXA Gulf to achieve a critical size and become the largest international insurer in the region. This enabled it to inherit some strengths from Norwich Union, including local expertise and knowledge, intermediary relationships, personal and corporate lines of business, marine cargo and a spread of offices throughout the GCC. AXA Gulf also gained as its JV partner, the Kanoo Family, a respected and established trading family in the region," says Rossi. "AXA's existing healthcare business, motor and travel portfolios, together with the AXA Group support, have contributed to make AXA Gulf a formidable force in the market place," he emphasizes.
© Oman Economic Review 2007
