The World Insurance Forum (WIF) commenced at the Dubai International Financial Centre (DIFC) yesterday for the first time outside Bermuda with focus on the need for transparent, accountable and internationally accepted standards across the financial services sector.
Inaugurating the forum, Michael But, chairman of the WIF Advisory Board, said addressing these issues would be the main driver of efforts to handle increasing economic challenges.
He said the WIF this year shifted to Dubai because the emirate and Bermuda have much in common.
“They are both small jurisdictions seeking to add high value in a rapidly evolving global financial market.”
Dr Omar bin Sulaiman, Governor of the DIFC, said the centre aims to act as a gateway to a vibrant region of more than two billion people with a combined economy worth $2.3 trillion (Dh8.44trn) in terms of GDP.
“A region that stretches from North Africa, the Levant, the Caspian, the Indian Sub-continent and the GCC is a fertile new market for the insurance industry.”
He quoted international estimates showing the region represents only 0.2 per cent of the global insurance market and offers a sound future growth potential in this industry. “This vision is boosted by infrastructure, increasing investments and rising GDP per capita. Governments are also encouraging individuals to save for their retirement and are introducing compulsory insurance for certain non-life risks. So the growth rates of insurance premiums in our markets have far exceeded those in global markets. This trend is expected to continue for the next few years.
“The UAE is the largest insurance market in the Middle East, growing by 27 per cent in 2006, with total premium volume of $2.7 billion. The total insurance penetration compared to the GDP is just 1.7 per cent compared to the global ratio of 7.5 per cent,” bin Sulaiman added.
There are multiple reasons that make Dubai the best place for insurance related activities, he said. “The DIFC is an onshore financial centre and there is no retail business or direct insurance business conducted here. Our aim has been to establish Dubai as a reinsurance hub with a captive domicile.
“In the Gulf and across the world, the growth rate of Takaful, or Shariah-compliant insurance, is far outstripping growth in conventional insurance. The Takaful market is growing by 20 per cent annually compared to 2.5 per cent growth of conventional insurance. The Takaful market is growing by 40 per cent annually in the GCC.”
Chakib Abouzaid, CEO of Takaful Re, told Emirates Business that despite official estimates of the Takaful industry of about $2.5bn, the actual size of the market is about $5.7bn.
“Official estimates account for only insurance products named Takaful, but if we look at all Islamic insurance companies, with their different products, they are operating according to Takaful [co-operative] concept. We have a large number of new Islamic insurance firms, including 35 in Saudi Arabia.”
Farid Lotfi, Chairman of the Dubai Insurance Group, said the main challenge facing regional insurance firms is the implementation of World Trade Organisation agreements, which open markets for competition.
0.2%: Is the representation of the region in the global insurance market. This offers sound potential for future growth of the insurance sector
Insurance sector’s massive potential highlighted at WIF