The Global rating agency (Standard & Poor's) has Considered that insurance market in Kuwait is still the least performance in Gulf countries,the insurance sector records a growth by 5% last year,while the figure was 20% in Saudi Arabia and 10% in the UAE,and that due to adoption of the Kuwaiti economy on oil revenues mainly and not to exploit the revenue in the new projects to stimulate the growth of business sector.
The rating agency expects further growth in the traditional insurance sector more than Takaful insurance which did not succeed in marketing their products or the concept of Takaful (symbiosis) insurance,the agency advises to find a unified legislative framework of the work of insurance companies by standardizing procedures with the participation of central banks that can find common ground between the countries of the Gulf Cooperation Council and to talk about the insurance sector in Kuwait and the Gulf states.
Al-Qabas News paper has an exclusive interview with the director of financial institutions ratings Kevin Willis in the global rating agency Standard & Poor's, and in the dialogue came the following:
. ● How do you find the development of the insurance sector in Kuwait?
Insurance sector in Kuwait has witnessed a slight improvement, but need to pay attention in terms of legislation and laws governing the sector,especially in the larger side of risk
The demand for the insurance sector is weak because of the slow growth of the Kuwaiti market movement with regard to projects that require cooperation with the insurance sector.
Of course, the insurance companies in the region are usually suffer from the problematic money raised to invest
whether through investment in real estate or a deposit in a bank or otherwise, because the difficulty lies in finding budget when there are demands such as a fire in a factory or the destruction of the shop, which puts insurance companies in the basic problem is the availability of cash to be paid while the demand
● How Takaful (symbiosis) insurance market are staying in Kuwait compared with the Gulf Cooperation Council (GCC)?
- For Kuwait, the Takaful insurance is the transfer of responsibility, i.e in case of any problem, everyone bears the same responsibility, but according to overall performance, it is very low as a result of the entry of many of the Takaful insurance companies during the past five years to the market, which was limited, consequently, the performance of these companies was low and disappointing.
For the performance of Takaful insurance market in the Gulf states is similar to some extent, with the exception of the Saudi market, which is completely different from the other Gulf markets.
Due to the Gulf markets, we find that in the United Arab Emirates there are 90 listed insurance companies, including 7 Takaful insurance companies, and seven of these companies only one company made a profit in 2013, which supports the argument «disappointing performance».
But in the Saudi market, the situation is quite different because the whole Islamic legislation, and therefore compete Takaful insurance companies, or so-called cooperative insurance exists, but in spite of it all, the companies made losses in 2013.
● Can you talk about the growth of the sector in Kuwait over the past years?
- The total growth of insurance sector in Kuwait stands at about 5 percent, which is considered the least in comparison with the Gulf Cooperation Council (GCC), as we find that the growth of the sector can be described as competitive in Saudi Arabia, with the achievement of the total growth rate of 20 percent, But in the UAE, especially the Northern Emirates, With the growth of Dubai, the sector recorded a growth rate of 10 percent, and is expected during the current year to exceed that percentage growth, in light of developments and economic development taking place in the United Arab Emirates, and talking about the Qatari market, we find that sector's growth rates usually range between 8 and 10 percent , suggesting that Kuwait is the least performance in this area.
● How can we stimulate the growth of the insurance sector in Kuwait?
- This point is linked mainly to the quality of the existing economy, which depends mainly on oil revenues, in addition to the enormous surplus cash that are not used in different projects, and therefore does not turn out to be assets needed to secure the (purchase of insurance policies for it), for this reason if we want to stimulate the insurance market in Kuwait we should diversify sources of income and economic activities, it isn't natural that the oil revenues represent 93 percent of the economy
● How much is the size of the insurance sector in Kuwait compared with the Gulf States?
- In 2013 the size of production of the insurance market in Kuwait reached $ 195 billion, while in Saudi Arabia $ 745 billion, $ 396 billion in the UAE, and $ 211 billion in Qatar
If we look to the size of the sector for the national income, in Kuwait is 0.49 percent, while in Saudi Arabia and the UAE 0.86% and 2.02%, respectively, 0.7% in Qatar.
And the size of the sector in 2013 in the Gulf Cooperation Council (GCC) compared to the world, we see that the Gulf states represent 1,663 billion dollars, while the world is 73,889 billion dollars.
● Is the future growth in the Kuwaiti market for traditional insurance or Takaful?
- Traditional insurance will achieve stable growth due to the availability of the dynamics of working in the market is larger than Takaful insurance, and if you noticed the output of traditional insurance companies of all types, we find that it achieved better widespread as it has the biggest pull factors, and the Takaful insurance failed to define its products and its concept which are being put to the insurance of the community, although the society is an Islamic society governor, but Takaful insurance companies failed to define their products to attract more customers.
● the reputation of international rating companies has been shaken during the global financial crisis, how you were able to restore the reputation and credibility?
-we responded quickly to positive changes in global legislation, and we have to rebuild the evaluation process in more integrated manner, taking into account not to include any aspects of the inconsistencies that were occurring in some of the earlier operations, in addition to focusing on each discipline in order to provide a broader assessment and more transparency. And speed of response to changes that have helped us to earn the trust again.
● What advice would you give to lawmakers?
- Advise them to find a unified legislative framework for the insurance companies, by standardizing the procedures, with the participation of the central banks which can find common ground between the Gulf Cooperation Council (GCC).
But considering that Saudi Arabia is the largest country in size and located in the economy, there worry about domination of Saudi Arabia due to the size of its market and the enormous funding
● if you have a magic wand, what would you change in the insurance market, or cancel altogether?
- I wish if you asked this question at the beginning of the interview in order to think about it too long But I see that risks are an essential factor in all companies, and therefore the risk management process is a very important issue, so we find that the financial markets authority has asked the Kuwaiti companies to have a framework for risk management, was also noted that companies that have committed themselves in risk management had an improvement in their business in recent years. So I choose to activate risk management as required
The rating agency expects further growth in the traditional insurance sector more than Takaful insurance which did not succeed in marketing their products or the concept of Takaful (symbiosis) insurance,the agency advises to find a unified legislative framework of the work of insurance companies by standardizing procedures with the participation of central banks that can find common ground between the countries of the Gulf Cooperation Council and to talk about the insurance sector in Kuwait and the Gulf states.
Al-Qabas News paper has an exclusive interview with the director of financial institutions ratings Kevin Willis in the global rating agency Standard & Poor's, and in the dialogue came the following:
. ● How do you find the development of the insurance sector in Kuwait?
Insurance sector in Kuwait has witnessed a slight improvement, but need to pay attention in terms of legislation and laws governing the sector,especially in the larger side of risk
The demand for the insurance sector is weak because of the slow growth of the Kuwaiti market movement with regard to projects that require cooperation with the insurance sector.
Of course, the insurance companies in the region are usually suffer from the problematic money raised to invest
whether through investment in real estate or a deposit in a bank or otherwise, because the difficulty lies in finding budget when there are demands such as a fire in a factory or the destruction of the shop, which puts insurance companies in the basic problem is the availability of cash to be paid while the demand
● How Takaful (symbiosis) insurance market are staying in Kuwait compared with the Gulf Cooperation Council (GCC)?
- For Kuwait, the Takaful insurance is the transfer of responsibility, i.e in case of any problem, everyone bears the same responsibility, but according to overall performance, it is very low as a result of the entry of many of the Takaful insurance companies during the past five years to the market, which was limited, consequently, the performance of these companies was low and disappointing.
For the performance of Takaful insurance market in the Gulf states is similar to some extent, with the exception of the Saudi market, which is completely different from the other Gulf markets.
Due to the Gulf markets, we find that in the United Arab Emirates there are 90 listed insurance companies, including 7 Takaful insurance companies, and seven of these companies only one company made a profit in 2013, which supports the argument «disappointing performance».
But in the Saudi market, the situation is quite different because the whole Islamic legislation, and therefore compete Takaful insurance companies, or so-called cooperative insurance exists, but in spite of it all, the companies made losses in 2013.
● Can you talk about the growth of the sector in Kuwait over the past years?
- The total growth of insurance sector in Kuwait stands at about 5 percent, which is considered the least in comparison with the Gulf Cooperation Council (GCC), as we find that the growth of the sector can be described as competitive in Saudi Arabia, with the achievement of the total growth rate of 20 percent, But in the UAE, especially the Northern Emirates, With the growth of Dubai, the sector recorded a growth rate of 10 percent, and is expected during the current year to exceed that percentage growth, in light of developments and economic development taking place in the United Arab Emirates, and talking about the Qatari market, we find that sector's growth rates usually range between 8 and 10 percent , suggesting that Kuwait is the least performance in this area.
● How can we stimulate the growth of the insurance sector in Kuwait?
● How much is the size of the insurance sector in Kuwait compared with the Gulf States?
- In 2013 the size of production of the insurance market in Kuwait reached $ 195 billion, while in Saudi Arabia $ 745 billion, $ 396 billion in the UAE, and $ 211 billion in Qatar
If we look to the size of the sector for the national income, in Kuwait is 0.49 percent, while in Saudi Arabia and the UAE 0.86% and 2.02%, respectively, 0.7% in Qatar.
And the size of the sector in 2013 in the Gulf Cooperation Council (GCC) compared to the world, we see that the Gulf states represent 1,663 billion dollars, while the world is 73,889 billion dollars.
● Is the future growth in the Kuwaiti market for traditional insurance or Takaful?
- Traditional insurance will achieve stable growth due to the availability of the dynamics of working in the market is larger than Takaful insurance, and if you noticed the output of traditional insurance companies of all types, we find that it achieved better widespread as it has the biggest pull factors, and the Takaful insurance failed to define its products and its concept which are being put to the insurance of the community, although the society is an Islamic society governor, but Takaful insurance companies failed to define their products to attract more customers.
● the reputation of international rating companies has been shaken during the global financial crisis, how you were able to restore the reputation and credibility?
-we responded quickly to positive changes in global legislation, and we have to rebuild the evaluation process in more integrated manner, taking into account not to include any aspects of the inconsistencies that were occurring in some of the earlier operations, in addition to focusing on each discipline in order to provide a broader assessment and more transparency. And speed of response to changes that have helped us to earn the trust again.
● What advice would you give to lawmakers?
- Advise them to find a unified legislative framework for the insurance companies, by standardizing the procedures, with the participation of the central banks which can find common ground between the Gulf Cooperation Council (GCC).
But considering that Saudi Arabia is the largest country in size and located in the economy, there worry about domination of Saudi Arabia due to the size of its market and the enormous funding
● if you have a magic wand, what would you change in the insurance market, or cancel altogether?
- I wish if you asked this question at the beginning of the interview in order to think about it too long But I see that risks are an essential factor in all companies, and therefore the risk management process is a very important issue, so we find that the financial markets authority has asked the Kuwaiti companies to have a framework for risk management, was also noted that companies that have committed themselves in risk management had an improvement in their business in recent years. So I choose to activate risk management as required