BY MOHAMMAD SHOEB
DOHA: An increasing influx of foreign insurers and brokers is creating unhealthy competition, and playing a “negative role” creating “more chaos” in the country’s insurance sector. Developing Qatar as a hub for financial services “at the expense” of the country’s publicly listed companies is not good, said a senior official of Qatar Islamic Insurance Company (QIIC) recently.
Ali Ibrahim Al Abdulghani (pictured), CEO of QIIC said: “The insurance market is increasingly becoming very competitive due to the influx of the foreign insurers. The large numbers of insurance broking firms (have) added chaos to the situation as their only aim is to please their clients at insurers’ expense.”
He added: “Although Qatar Central Bank (QCB) has taken over the chair of insurance regulatory authority, a clear and integrated regulatory framework has to be formulated urgently.”
Al Abdulghani believes that companies based outside, a third category of brokers who have no physical presence in Qatar, have added more competition in the sector. All the insurers in this country should sit together and discuss the issues faced by them sector.
Reiterating the issue, he added that players working from overseas offices, either companies or brokers, are playing a negative role in competing and breaking down all the insurance rates regardless of the logical and healthy principles in underwriting the risks.
“We urge the regulatory authorities to intervene urgently to stop such practices and protect the insurance sector,” Al Abdulghani told The Peninsula in an interview via email.
He also believes that there are tremendous opportunities for the sector as the insurance penetration of the personal lines in the region is very low compared to the rest of the world. “The economic growth of the nation is very much promising and we presume the sector will grow rapidly,” he said.
However, he said that a detailed insurance law will eventually be announced for the benefit of the sector. “A comprehensive regulatory frame work will save the industry.”
Commenting on the proposed expansion of the responsibility of Qatar Credit Bureau to other sectors including insurance, he said: “We welcome such a decision. All the recent regulations which have been taken so far aimed at restructuring the market for its welfare and development.”
Speaking about the role of QFC Authority, which is endeavouring to transform Qatar as a hub for financial services, he said: “To a certain extent, we agree that the QFC (Authority) has a vital role to play in this regard, but needless to mention that it should not be at the expense of the publicly listed insurers in the State of Qatar. A financial hub doesn’t mean to drain the national resources to outside the country.”
Asked if he supports a new insurance law to reserve government and semi-government projects for ‘national insurers’ and why, he said: “Because the national insurers are more accountable, responsible and externally audited and listed in Qatar Exchange (QE). It is obvious that the government and semi-government projects should be reserved for the national companies due to their positions in the Qatari economy.”
He said that national insurance companies are the public assets and their shares are openly traded at the QE. So the government should prioritise their business for the national companies.
In Qatar there are five Islamic insurance companies (Takaful) and about a dozen conventional insurers, including those operating from outside QFC. With the upcoming mega infrastructure projects, the sector has a brighter future, especially the life insurance business, which has the lowest penetration in the region with about only six percent of total premiums coming from life while the rest 94 percent from non-life.
Analysts suggest that ‘perfect competition’ market structure (with large numbers of buyers and sellers) not only protects the interests of companies, but also provides shield to consumers from abuse of market dominance.
The Peninsula
