A recent bulletin points out that the “future of the MENA [Middle East North Africa] Insurance market remains bright, but the local insurance companies must start their transition from fragmented companies to become national champions and regional players now.”
The advice comes from a survey of members of the MENA Insurance CEO Club (MICC) carried out jointly last year with Oliver Wyman. The survey, entitled “A Successful Future,” stressed that “despite the worsening intensity in competition, the social political tensions in the region and the many challenges facing the industry, the MENA has a bright future in insurance.”
The survey covered 12 CEO leaders in the market, finding a “combination of apprehension and optimism regarding the immediate overall outlook for the industry. Although half of the respondents consider that the industry will face more challenges than opportunities, 85 percent were confident that their individual companies are more likely to face opportunities rather than challenges over the coming 12 months.
“The survey was conducted to understand their views on the outlook for the industry, the key challenges and the response required from companies to ensure a successful future for the industry in the region. The survey carried out by Oliver Wyman was a combination of an on-line questionnaire combined with intensive and extensive follow-up interviews with the respondents.”
In reviewing the operating and competitive landscape, the Survey concluded that “most MICC members felt that larger or more sophisticated insurers will cope with the challenges better. About two-third expected more foreign companies to enter the markets and most were convinced of the need for improved insurance skills and capabilities.”
The survey also examined the price structure in the region and “showed that aside from intense competition, pressure on pricing came from more brokers coming in as well as the increasing price sensitivity of customers.” There was also a “view that newcomers and the large global reinsurers are supporting weak pricing across the region.”
In conclusion the MICC bulletin said that most respondents “believe that local industry needs to be more disciplined and bottom line focused. There were a host of issues raised about regulatory and legal environment with hopes that regulators can be more active in dealing with weaknesses in the market and driving best practices, and a legal environment in which disputes could be settled quickly and effectively.
“Most participants felt that it would be desirable for regulators to take a stronger stance with regards to consumer fraud, reporting and statutory violations, dealing with failing insurance companies, and improving risk management capabilities and reporting standards.”