What's happening in the industry?
The UAE Insurance Authority now is part of the UAE Central Bank. It is now an acknowledgment that insurance is no more a sub-set within the overall Banking and Finance but an important arm of the economy. The industry goes about its commitment silently by ensuring that business is sufficiently protected. The industry also picked up the tabs on various lines of business following the pandemic. Finally, insurance is stepping out and now coming under its own spotlight.
Electronic and Digital revolution initiative
During the course of the year, IA promulgated the Electronic Insurance Regulations thus paving the way for InsurTech companies to set shops and flourish. It is an admission that Digital & Technology is here to stay. Companies will have to adopt or perish. We see close on the heels the Central Bank also opening a separate division for Fintech. Does this mean that open banking system is a reality?
Is it only for General Insurance?
No. Life Insurance has also seen its major change. With the introduction of BOD 49; it has fundamentally rearranged the distribution model. This has paved the way for more balanced and sustainable growth. Most importantly the distributors have been protected whilst the adjustment is currently underway.
Challenges or opportunities
Whilst the pandemic pushed the industry out of its comfort and adopt technology as a way forward; it is no more a “disruption”. It is a new normal. These are going to present its own unique opportunities and challenges too. One of the most important decisions that the industry has to make is what is the ideal size of the company? What level of automation is it willing to undergo? Does the company want to build all of it; or adopt smart InsurTech Startups to deliver better results, reach and penetration. A newer world order calls for a newer thinking!!!
2020 will go down in history, not just for the pandemic; it will record positively how certain companies adopted and made it a “Digital First” strategy. Some companies rejigged their business model to adopt a regional approach in terms of the spread of risks and not be totally dependent on their host market.
Every economic downturn has always seen new capital coming in. We have seen companies take an objective view and exit the market in this region. This time too it is no different. Whilst one MNC shareholders have accepted the offer globally, another MNC have exited the region. The best part is that the region has stepped up and have acquired the company making it a truly regional player. Whilst we are seeing a shakeup on the top deck; will the rest of the pyramid also see some activity? Takaful space for sure is seeing activities with mergers and acquisitions. Insurance Stocks on the Stock Market is also seeing a renewed activity with some investors actively investing across the industry.
UAE government has allowed 100% foreign ownership which should give the economy a major boost and arrival of new capital; the insurable market will see an expansion. With Dubai Nasdaq considering an exclusive platform for SME listing, this will not only open new avenues for investing for the insurance companies, it will help the industry to open up and flourish.
The opening of bilateral relationships with Israel is expected to see a flurry of activity in the InsurTech space. DIFC & InsurTech Israel have had their first virtual roadshow. The reforms are on its way.
Do we then get to see big capacity providers and smart insurance providers calling the shots in the future? Is the time ripe for to bring in the next disruption in the market.
I believe this shake-up and rearrangement is just great. Whilst the general expectation was IFRS 17 implementation will provide a window for non-serious players to exit, I believe that disruption has already started even before that.
Welcome to the new insurance order and to the digital
Founder & CEO