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29 March 2024

Strong demand for insurance from firms in Middle East

Saad Mered Chief Executive Officer, Zurich Middle East (DENNIS B MALLARI)

Published
By Shveta Pathak

Zurich Insurance Company (ZIC) has launched its general insurance proposition, following the issuance of licence from DFSA, to operate in DIFC. The launch, says Saad Mered, CEO, Zurich Middle East, will allow ZIC to focus on growing its global corporate segment in the Middle East and working with local insurers in the region on facultative reinsurance in areas such as energy, construction, large property and casualty, among others.

Demand for general insurance from major companies in the Middle East is strong and the licence in this "under- penetrated market will help company address risk management needs of multinationals", he told Emirates Business in an interview.

To cater to varied segments, Zurich has plans to enter the Islamic insurance (takaful) soon. "We believe we won't be successful unless we adapt ourselves to the region. One example is Takaful family business that we are about to launch," Mered said.


What would Zurich Insurance company focus on?

It is an offshore licence for insurance. We would be doing facultative reinsurance to insurance companies. We would focus on assisting them with major accounts and complex risks. We aim to be lead facultative insurer, to underwrite accounts, set terms and conditions and provide all services that Zurich is accustomed to around the world for this segment of business-risk engineering services. We are building a strong team, doing a lot of underwritings and working with low-cost insurance partners in the region. We are bringing not just product and services but also skills and technical ability to be able to fully leverage Zurich's proposition here.

You started here in June. How would you cope with market changes given that economic scenario has been undergoing changes?

We believe a consensus is building on return of positive sentiment on the economic front. The Middle East is dong very well compared to other regions. Some say it is probably, after China, the best of the regions. We see the insurance industry continuing to grow. Results for 2009 in this industry would continue to grow in probably double digits.

Zurich across its businesses is seeing good activity. We are seeing a lot of opportunity in terms of major companies in construction projects and oil and gas business. Clearly price of oil that has been in $65 (Dh238.55)-$75 a barrel has helped the region. It has a direct impact on the insurance industry as well.

Would you attribute the potential to the fact that the market is under-penetrated?

In the next five years, the overall insurance growth rate for the market would be in high teens to low 20s, which is high. I think that is a consequence of the trends of low penetration and relatively low per capita insurance spend. Does mandatory insurance help that process along? Clearly it has in the UAE and Saudi, but it cannot help in every stage of life. At some stage insurance companies will have to do more in terms of education, in terms of explaining products and adapting products to the region and to the cultural needs of the region.

What will Zurich do in that direction?

We believe we will not be successful unless we adapt ourselves to the region. One example is takaful family business that we are about to launch. In the general insurance area, we would look into how we can better adapt ourselves and have relevant products and propositions in the market place.

How are insurance needs in this region different from others?

Fundamentally the needs are the same. Growth comes back to low penetration and relatively low per capita spend on insurance. The issue is not putting Shariah compliance on the side for now, the issue is not whether or not there is a difference. The issue is how the Middle East market catches up with rest of the world. That brings us to the issues of awareness, distribution and innovation.

We have to make it more interesting and relevant to the needs of consumers. If I look at the percentage of customers, who are still not buying, it means we still have a lot of work to do.

What is the growth Zurich is looking at?

Our ambition is to grow beyond the market growth. I cannot be more specific with you on numbers. We are still looking at market place growing in high teens. In 2010, we are going forward. 2009 would be mid to low teens for the insurance industry in the region.

What are your plans for the region?

To grow life business even further and to expand our life business in new product areas and new segments and in new territories as well. Launch our general insurance business to address needs of small consumers and retail customers. Of course, we have takaful parallel to it.

We are strong in the UAE, we have good business in Bahrain, we entered Qatar 12 months ago. We would like to see GCC well covered as priority, so it means other GCC countries – Saudi Arabia, Oman and Kuwait in the next five years.


PROFILE: Saad Mered Chief Executive Officer, Zurich Middle East

Mered oversees all of Zurich's operations in the Middle East. He started his insurance career with AIG where he held various positions from financial lines underwriting and running AIG's Egypt operations to a global role in the implementation of its small business strategy.

Mered holds a Juris Doctorate from Georgetown University and a Bachelor of Arts in Political Science from the University of California, Berkeley.

 

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