26/05/2016 06:00 AST
Bahrain’s insurance industry is ripe for consolidation, says an industry leader.
Tas’heelat Insurance Services Company (Tisco)’s general manager Ali Al Daylami told the GDN that mergers and acquisitions would help local insurers become sizeable and well-capitalised and more competitive globally and regionally.
Mr Al Daylami was speaking on the sidelines of an industry luncheon that he hosts annually.
He feels that Bahrain and the wider GCC region’s insurance market presents scope for further growth, despite the oil price slump, high interest rate regime and global economic volatility.
Regionally, there are two main drivers of growth, he says, with the government’s continuing focus on substantial infrastructure and industrial expansion along with continuing population growth being the first.
Secondly, although Bahrain has the highest insurance penetration rate in the GCC at nearly 2.5 per cent of the population, it is still significantly lower than most advanced economies keeping in mind the per capita income, he said.
“This is a clear indication of the room for significant growth in a market which is highly competitive.”
Mr Al Daylami says he expects the fierce competition to somewhat ease in the future as the market grows.
According to him, Bahraini insurance companies had good combined ratios and should look to develop their business model to move towards underwriting profitability and reduced dependence on net investment income.
Bahrain’s insurance density, a calculation that measures insurance premiums against GDP, is higher than the regional average, at $543.90.
As well as offering a strong value proposition and skilled local workforce, the kingdom also has a long-established and well-respected regulatory framework and a liberal, supportive business environment.
Overall while the insurance industry is facing diminishing returns and declining growth rates, mandatory motor insurance and the fact that most project risks are underwritten have also spurred the market expansion.
Health insurance is expected to follow the motor growth trend as a result of the implementation of compulsory medical cover for expatriates and visitors, he says.
The long-term insurance sector – comprising life and savings products – has experienced the most rapid expansion in recent years.
“We expect the broker, online and phone channels to gain traction driven by more rapid growth and increased consumer awareness.”
Established in 1997 to arrange a wide range of insurance products and services that include motor, home, life and travel insurance, Tisco last year achieved BD1 million as net profit for the first time in its history.
The company reported a net profit of BD1,010,000 for 2015 as against BD813,000 in 2014.
During the year, says Mr Al Daylami, it provided a wide range of insurance brokerage services and arranged in excess of 23,000 motor insurance policies.
Varieties to choose between 10 leading insurance companies with different kind of products (motor, home, health and travel) under one roof.
“Such results were achieved due to our excellent relationship with all the partner insurance companies which continue to provide us tailor-made products as per requirements.”
He says Tisco continues to refine its business model to increase customer convenience and has introduced some new initiatives for reaching out to new customers.
“We keep looking for more opportunities to improve upon the captive in-house business from Bahrain Credit, National Motors Company and strategic partnership with some car sub-dealers.”
Gulf Daily News
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