What is OIC’s largest class of business? How do you see this evolving over the long term?
CHOFFEL: OIC is currently 50% medical and life and 50% non-life. Our largest single line is medical, but we expect non-life to grow rapidly. The segments that we are going to move into, in the future, are the compulsory areas, but we shall also focus on underdeveloped lines of insurance, such as casualty, personal accident, travel, etc. Medical is probably the biggest drive right now in the Middle East. Other strong sectors evolve around infrastructure jobs on the non-life side, and mortgages on the life side. A lot will also depend on the continued familiarization of the local population towards insurance, which is gaining ground every year. Pensions will be the next big thing for our markets.
Which traditional and non-traditional markets are you looking to move into? What are your future plans for expansion throughout Oman?
CHOFFEL: We are currently involved in the Gulf region. Size wise, were we are the second largest company. There is a lot of potential in our region, but I do not think that it is very sound to keep all of your eggs in one basket. As a result, we made an acquisition, a joint venture, in Turkey, in the middle of last year. We are now looking at opening up a facility in Iraq. Saudi Arabia is another focus. Other markets will be looked at on an opportunistic basis. The above named countries are the big engines that offer potential in this region. However, if we find something that makes sense in Oman or Libya, we will go for it.
How competitive is the insurance industry in the UAE, Oman, and Qatar? What is your market share and how do you see this evolving over the next 2-5 years? What are your main competitive advantages?
CHOFFEL: We have 62 insurance companies registered in the UAE. This represents two more companies than Germany, for a GNP which is 1/30th of Germany. In the UAE, our market share is about 15%, which is sizeable. Our branches in Oman and Qatar bring about 10% of our income and 90% comes from the UAE. This is why we are working towards re-balancing. Turkey will be in our books this year. A major advantage for us, other than our size, is the fact that we obtained an upgrade from Standard & Poor’s last year. We are now in the A range category. This is what differentiates us from many other players in the market, and gives us access to better business regionally. We are overcapitalized vis-à-vis our rating, which is always a good thing. This allows us to plan for expansion and make appropriate acquisitions. Our board support is very important. It is extremely valuable to have a board that stands by you and supports you, and we do!
OIC has been rated A Excellent by AM Best and A-stable by Standard & Poor’s. Where have you been most successful and how do you plan on retaining these strong ratings? What challenges are you currently facing in the industry?
CHOFFEL: We just received this upgrade last year, the benefits will materialize over time. We are still looking at getting further improvements. We have been upgraded because we are tightening our controls, strengthening our underwriting, and revisiting the reinsurance situation. We are focusing on Enterprise Risk Management activities, like a proper insurance company should. This will help us keep our rating and improve upon it in the future. We have faced the same challenges as everyone else. The markets in which we operate today are overcrowded. We are trying to geographically expand, fast! We are also developing strategic alliances with other counterparts. For instance, we service a number of major multinational companies that do not have licenses in the countries where we are represented. This gives us access to bigger portfolios that we would probably not gain that easily otherwise. That is the strategy that we have developed very actively, with international and regional companies. We favour an alliance to a fight. We find that it is a lot more rewarding. Mergers are difficult to achieve. Alliances are a different story and when they make sense, they can be instrumental. I would give support to any of my colleagues in the market when it makes sense.
We have 62 insurance companies registered in the UAE. This represents two more companies than Germany, for a GNP which is 1/30th of Germany.
Oman has recently implemented Islamic financial products and services. In what ways is OIC looking to incorporate Takaful into its business mix here in Oman? How do you see this this evolving over the next 2-5 years?
CHOFFEL: We don’t really have plans to enter the Takaful market for our current direct operations. We do actively participate as one of the main insurers in a think tank that discusses how to develop Takaful in the region in a more efficient way. My preference is to aim at reinsurance because that is the major need right now. There are reinsurance Takaful companies but I do not know how successful they really are. We need a big player, that can service this region. I think this would be something that we should look into, as a promoter or as an investor. I am sure that we could attract interested parties to partake in this venture.
Currently, premiums account for roughly 1% of Oman’s GDP. With the Omani government’s five-year plan in place, the market is expected to continue to grow and provide opportunities for the sector. Which segments in the industry represent the best opportunities for growth?
CHOFFEL: It looks very likely that medical insurance will become compulsory everywhere in the Gulf. That in itself will bring a lot more premiums on the table. Mortgage laws are being developed and that also offers opportunities for insurers. We are about to launch pensions, which should be the next big thing. All of the above, plus an appropriate geographical spread, as well as continuing to attract the best people, that is our strategy.