Forward Planning: Organising the insurance market

It was thrilling news to see the Saudi Kingdom legalising insurance and making medical and motor insurance mandatory. Insurance as in the Islamic cooperative form has been recognised as a very important part of the modern economy structure of any advanced country.

The Saudi government, over a very short period of time, has sought the highest expertise in the insurance industry to help it build its insurance supervision and examination department within the Saudi Central Bank, making it the most advanced supervision system in the Middle East.

Insurance operators in the kingdom were either the Saudi cooperative insurance organisation or foreign insurance firms operating from abroad and working as brokers which used to dominate the Saudi insurance market.

The latest changes will certainly positively influence the countries around. The UAE, for example, has one of the most crowded markets, with 47 existing insurance companies, three more in the process of being registered and approved and more than 100 insurance brokers.

In the country today, the insurance industry is going through a process of overhaul where the insurance law, insurance supervision and the market itself are all expected to be amended and organised to meet today's requirements.

The financial services industry is expected to be open within the coming few years allowing foreign companies to distribute their products in the UAE and, reciprocally, local companies to sell to other countries.

It will finally permit the formation and establishment without restrictions of foreign companies inside the country, meaning that they will be be treated like local ones.

The World Trade Organis-ation (WTO) requires also the strengthening of the national resources before opening the local market, making sure such change won't destroy or harm the national and local economy.

The other requirement by the WTO is the development of the national human resources in order to involve the local population in the running and development of their own economy.

At present, in the insurance industry, there are around 3,000 people employed in the 47 insurance companies, of which about 3.5 per cent only are nationals, so low a quota that certain steps must be taken to attract and employ nationals in this very important financial services sector.

There are several reasons why the percentage of locals employed is so low and many parties concurred to keep nationals out of the insurance sector, including nationals themselves.

For one thing, many people, including the majority of existing insurance companies' employees, complain about the odd working hours of most insurance firms with the lunch break extending from one till four in the afternoon and working hours being prolonged until seven at night.

Little family life is left when you come home tired at 8 pm -or later - if you have to commute from one emirate to another. Changing the working hours while not reducing them such as is practised in the banking industry would be part of an answer to the problem.

In a few cases, management resistance to positive change is another problem stemming from a lack of insight in recognising the benefits gained from this country and the unwillingness to give back by attracting, training and employing nationals in the insurance industry.

Of course, this attitude is not limited to the insurance industry. Some people say that "nationals don't like - or are not made for insurance" - which is what I heard over and over when I started working in this industry 13 years ago.

This idea will be easily overcome by schooling and training of young nationals who will learn to appreciate and respect this industry like I did myself. The world around us is changing and steps are taken to meet new challenges. Nationalisa-tion will take place gradually in the insurance industry as in other fields, no matter what.

The writer is managing director of Gulf Insurance Consulting and a licensed insurance consultant and financial planner.