Dubai-based Oman Insurance Company (OIC), the largest insurer in the UAE, may float an Islamic insurance (takaful ) firm in the country.
The company, also known as Tameen, has appointed an advisory company which is carrying out the due diligence for it to foray in to takaful segment.
OIC chief executive officer Abdul Muttalib Al Jaidi said: “OIC cannot have a takaful window and to go for a company, a due diligence is underway. I can’t say yes or no as it depends on the results of due diligence. Looking at takaful companies available now, result wise, they are not adding any value to the market, they are just distribution channels. The result wise, if not all, 90 per cent of takaful companies doing business in the country are posting losses.”
He, however, refused to disclose the name of the advisory company carrying out due diligence and the completion period for due diligence.
“I can’t say when the due diligence will be over because it’s in the hands of the advisory company. There is already an advisory company but cannot revealed,” he added.
The UAE is currently served by 29 national insurance companies and 27 foreign insurance companies. There are approximately 10 takaful companies operating in the country.
OIC is the country’s leading insurer by premium volume (commanding a market share of nearly 15 per cent) and profitability, according to Clyde & Co- an international law firm.
Business Monitor International recently said that OIC is the largest local player, accounting for approximately 20 per cent of total premiums written by national companies, or 14 per cent of total premiums. Over the long term, according to BMI, it is reasonable to expect that the UAE will play a significant role in the development of Islamic finance in general and takaful in particular.
Industry players believe that the UAE insurance market is heavily overcrowded resulting in reducing their margins.
In an interview with this website, Al Jaidi raised question over the existence and viability of many insurance companies – particularly takaful – and their business models for consistently recording losses and losing market share.
“Most of them (companies performing poorly) are takaful companies, they are still doing their business and recording losses. We are working in a regulated sector and need to see an active role from the regulator to step in here and questions those companies. The poor performance could be because of wrong pricing or inefficient claim handling of their employees.”