Interview: Abdulla Sultan

How do you assess the main priorities for the sector as relates to the Financial Services Development Strategy 2022-26?

ABDULLA SULTAN: Digitalisation is essential to remaining competitive in today’s fast-paced environment. Industry leaders are aware of the importance of digitalisation and are working towards bringing companies together to promote online channels. The shift from traditional ways of conducting business to digital transactions is evident, and the Covid-19 pandemic accelerated this process. While banking has been leading the digital revolution, the insurance industry has been making strides towards digitalisation.

Although the relatively small size of the local market compared to others in the region poses a challenge, higher levels of capitalisation will help the industry. The Central Bank is looking into the possibility of increasing or fine-tuning the minimum capitalisation requirements, which would allow local insurance companies to boost their competitiveness.

Consolidation through mergers and acquisitions is another priority for the insurance industry. This trend has been ongoing since 2015 and is a viable option for companies looking to expand, either locally or regionally. Through consolidation, companies can reduce costs and increase efficiency, which can ultimately lead to increased profitability. By embracing these strategies, the industry can keep up with other markets, and contribute to the country’s economic growth and diversification efforts.

What opportunities exist for the diversification of products and services in the local market?

SULTAN: The insurance industry in Bahrain has experienced robust growth in recent years, with the general and medical insurance lines accounting for 84% of gross premium in the first half of 2022. This presents an opportunity for the industry to contribute further to the national economy. The sector is currently dependent on reinsurance for net premiums, and as such it is crucial for companies to diversify in order to retain more premium and reduce their heavy reliance on reinsurance. Additionally, exploring new ventures such as insurance technology will help to add more value to consumers and companies, and drive innovation within the industry.

By leveraging technology, insurance companies such as GIG Bahrain can improve their service offerings, reduce costs and enhance the customer experience, all of which bolster competitiveness. Players in the sector also have the opportunity to explore new business lines presented by government initiatives. For example, the government plans to privatise the national medical scheme and shift coverage to insurance companies, a move that will enable local businesses to grow and create employment.

By what means can consumer awareness be enhanced to support sustained growth?

SULTAN: Inclusion and diversity are integral parts of the industry’s growth strategies. For example, technology is key to providing seamless online services to younger people, underscoring why investing in technology ensures sustained growth. The facilitation of online transactions should ultimately raise awareness among younger generations on how insurance products and services benefit them.

It is important to note that there is often a lag before developments in other regions reach the GCC. This delay applies to changes in interest rates and inflation, and it also affects how the insurance sector reaches different segments of the population. As regional industry players, we must keep an eye on key developments in more mature and consolidated markets outside our region. However, it is also important to recognise that people in the GCC are unique. Therefore, we must also understand people’s needs and create a specific growth strategy accordingly.