Dubai: The UAE’s insurance sector has been hogging the limelight for the better part of the year. And more specifically since mid-April, which is when the skies opened up in ways that had not been seen in decades.
Then came the damages to property and vehicles, as well as disruptions to business operations. All through this, the insurance sector and its many players did their best to take on all the claims inundating them, for everything from a car repair to helping out retailers whose merchandise got written off from water seepage.
It was around that time that Watania issued a statement saying that all the motor claims it received from clients were approved with zero rejections. It was quite the bold statement when most of its industry peers were not saying much about the situation.
Gautam Datta is the CEO of Watania International Holding, the DFM-listed company that has two insurers in its fold, Watania Takaful General and the life cover focused Watania Takaful Family. In an interview to ‘Gulf News’, he says why doing things differently has worked.
No one expected an insurer to talk about 100 per cent claims approval just weeks after the April rains. What prompted it? Weren’t you in some ways sticking your neck out with such a statement?
There was so much uncertainty at that time in the market. Given the number of questions we were getting from our customers, we felt it was prudent to at least put out a statement that would give them a sense of direction.
No, we weren’t sticking our necks out because we knew this was something that had to be done. It did bring down the level of anxiety and the number of queries we were getting.
The major claims obviously came from motor and property. Motor claims were a little more straight forward, even though in the early stages there was an issue with the logistics available to address all the repair requirements. There were even issues like getting cars out of basements or places where they were stuck under water.
How far have you got on all the claims from the April events?
As of now, I understand that we have settled above 90 per cent of the claims related to motor. On the remaining, there could have been due to various documentary requirements. Or they are still in the process of being repaired.
The situation on property claims is much more complicated, because you have to kind of assess the values related to the damages. The insurer has to go back to the policies. On property, I think we have settled around 30 per cent of the claims, but all the claims have been registered.
We did have a particular challenge when it comes to appointing cost adjustors for a survey of the damages. All that is now resolved. The property claims are in various stages of being processed, whether it’s the reporting being done or whether it is the valuation.
Will all of the claims add up to further spikes in UAE insurance premiums?
The big impact that I see in Q3-Q4 2024 is the impact of all the changes that will take place across key insurance product lines. Especially when it comes to some of the underwriting disciplines and underwriting norms. That’s already reflected in the increase in insurance premiums.
I think this situation will run through the better part of 2025 because there will be those reinsurance treaty renewals due for January 1 for renewal.
Changes to the terms and conditions will apply to those insurers at that time - and those changes will be felt in market conditions. And on premiums too.
As for our business, we believe that our (end-of-year) forecasts of financials will be slightly different from what we anticipated when we started the year. Our key objective was to get the product-lines onto a sound underwriting and profitability platform. That has happened. even though we had these claims after April. We still have an underwriting surplus, even though it’s marginal.
If there are no other catastrophic events, then the trend will be positive. If we adjust for this one-off loss, then obviously we see the results going in the right direction.
Watania is coming off an ambitious merger move, through the deal with Dar Al Takaful. Have you got through all the merger processes? (The Watania-Dar Al Takaful deal was one of the first consolidation moves the UAE insurance sector has seen of late.)
The integration process was completed by end 2022, whatever few items were pending got resolved in the first quarter of 2023. That means changing of names on the various licenses are over and done with. That took a bit of time.
As a holding company with an investment license - because the holding company gave up its insurance license - our mandate is to look for investments in takaful-related businesses. The canvas is open. If an opportunity comes up, in the initial stages, it needs to be closer to home. So GCC is definitely on the radar, but right now, the focus is on building the balance-sheet in the UAE.
As per the understanding we have the Central Bank at the time, ours is a unique structure. We as a holding company owns 100 per cent of two operating subsidiaries. Our participation in insurance is only through the two insurance licenses that vest with the subsidiaries.
More to follow...
