Interview: Abdelhakim Benbouabdellah
What are the challenges to the development of the life insurance segment in Algeria?
ABDELHAKIM BENBOUABDELLAH: Our assessment of the life insurance market has revealed that several cultural factors challenge the sector’s development. Consequently, selling insurance to individuals is a complex act. On top of mastering all aspects of the product, the selling process requires a good knowledge of human behaviour, know-how and business skills. The marketing of life insurance in Algeria presents opportunities but requires the presence of several combined elements, including the development of the financial market.
Regarding health coverage and pensions, offering added value and customised products are among the top imperatives for the development of the market and efforts have to be made to that effect. The best way to proceed would be to align offers with the real needs of the insurable pool. This means a deeper analysis of behaviours and needs based on reliable surveys. Also, the diversification of service products must be based on quality rather than originality. Finally, an appropriate communication strategy has to be implemented along with an effective marketing approach.
How can insurance companies better align their strategies with new market segments?
BENBOUABDELLAH: The level of household income is important in defining a successful commercial strategy. Regarding new market segments, micro-insurance can present an adequate solution for low-income social groups. Without embarking on business projections, which are set by each company, I want to point out that the main prospect remains innovation which can constantly develop the products offered on the market. Insurance firms’ commercial strategy should be more aggressive and should include the conquest of new market segments and the expansion of the range of clients and products. Examination of insurance policies in the past five years shows a preponderance of standard products in different branches and does not highlight any real effort with regard to innovation that should characterise any commercial dynamics nowadays.
What efforts are needed to diversify both the customer and product base?
BENBOUABDELLAH: Efforts should be undertaken at various levels. It is all about multiplying the provision of information, advice and guidance for those who are insured and potential customers. Creating synergies between communication, marketing and sales is imperative. As an illustration, it is important to further deepen analysis in marketing, defining an appropriate entry strategy that can move towards innovating and gaining a wider clientele, such as through a search engine optimisation strategy. Efforts have been made with regards to distribution and communication strategies.
To what extent has takaful, or Islamic insurance, proven to be a new market opportunity?
BENBOUABDELLAH: Experience has shown here and elsewhere, including countries where the Muslim community is a minority, that takaful should not be overlooked in the overall development of the insurance market. Takaful meets the demands of a specific segment. It absorbs people who have been reluctant and sceptical about insurance products. The main goal is the development of a genuine market for life insurance in Algeria; it is therefore necessary to encourage a diversity of traditional and new insurance products, such as takaful. Regarding an appropriate takaful regulatory framework, there is debate on the ways and means of governing this type of product, along with other systems like micro-insurance. This process is aimed at creating a wider takaful offering that matches the purchasing power of the population and encourages competition between takaful operators and the emergence of Islamic finance. The lack of human capital is a major problem. Even if for some companies the availability of experts in the field is not an issue, it remains preferable to have an Algerian sharia board.
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