(MENAFN- Gulf Times) Qatar's insurance sector has not felt any major impact due to the decline in oil prices and continues to benefit from an economy, which is robust and presents incredible opportunities, said Doha Insurance chief executive officer, Bassam Hussein.
"As far as we are concerned, the renewals have been normal in the year so far and there are no big issues with any accounts. The engineering projects are moving ahead in full force. Everything that we expected to come is coming to the market. And everything we expected to compete for, are coming in for competition (for tender). So, I have not seen any real issues at this stage," Hussein said in an interview with Gulf Times here.
Highlighting the strength of the Qatari economy, Hussein said, "If you don't do well in Qatar, where else will you? That said, all countries will be affected one way or other in the event of a downturn in the global economy. But with solid fundamentals, Qatar will be among the least affected. It will continue to be among the best performers, not just in the region, but globally as well. I am really bullish about Qatar." But, he said, the return on investments might be impacted if there was a persistent drop in oil price and deterioration in the overall global economic conditions.
"Any prudent insurance company will have bigger returns from investment. So when the stock market falls, it becomes an issue. Similarly, falling property prices or weakening currencies can negatively impact our investment portfolio," he points out.
On the insurance side, Hussein said, there would not be any major impact on the premiums just because of the oil price decline.
"Already, the premiums are about 20% to 30% lower because of competition. Also, we are not expecting very favourable insurance cycles, where the rates will go higher. Overall, there is a surplus supply of reinsurance. So much so, that you can actually place anything now at reduced rates, even if the client has a claim. It is rather unfortunate" but it is a fact," the Doha Insurance CEO stressed.
He said Doha Insurance and the local market had certainly gained from big-ticket projects such as Q-Rail, preparations for FIFA 2022 and the infrastructure upgrade by Ashghal.
"All of these entities have been extremely supportive of the Qatar's insurance market. We have clearly seen major local entities supporting the Qatari insurance market in a professional way. And it is our job to prove ourselves, and I have no hesitation to say, we as a market, will prove ourselves to be the right choice. "Doha Insurance has a very sophisticated engineering team to service and win these accounts."
Hussein said Doha Insurance would continue to focus on accounts that gave it good returns.
"Going forward, we will spotlight on accounts that give us technical profit rather than mere market share. That said, we don't want to lose any major accounts unless the price become unrealistic. Our priority is to be a major competitor in the market," he said.
Hussein said insurance profits were now being derived from all lines of business, from engineering, fire and marine to investments. It is "significantly important that the premium has to be at realistic levels".
"On the property side, we have already seen premiums plunging. Without realistic premiums, it often becomes difficult to cover even one loss, which may run into millions. Nonetheless, the fact remains we have reinsurance behind us. But that is not the right way to do insurance. The rates have to be realistic in the first place." He said the engineering side has "still some meat in it".
"Professional indemnity has been a reasonably rewarding area for us," the Doha Insurance CEO said.
Hussein said 2014 was a "very rewarding year" for Doha Insurance.
"We are very happy with the results. Despite reduction in rates and increasing competition, we have posted a full year net profit of QR77mn last year compared with QR67mn in 2013. Our gross premium stood at QR534mn last year compared with QR517mn, the year before.
"We have not been able to see higher premiums because of about 30% reduction in rates and also because of the introduction of Seha - the national insurance scheme. The health insurance premiums in respect of Qataris are now going to Seha," he said.
DIFC approval awaited for reinsurance business
Doha Insurance expects approval to set up a wholly owned reinsurance business - MENA Re Underwriters Limited at the Dubai International Financial Centre (DIFC) within a few months, said CEO Bassam Hussein.
"We have got the green light to go into the second stage and we are going through that now. We expect an approval in the next few months. We have already hired a qualified senior executive officer, who will lead the team there," the Doha Insurance CEO said.
MENA Re Underwriters basically will do reinsurance business. It will be 100% owned by Doha Insurance.
"In future, we will look into giving part of that ownership, if we feel, it is of strategic interest to our company. But whenever that happens, we will have to go through the specified procedures to gain approval," Hussein said.
"We are very much excited that we are going into another major project in a key market," the Doha Insurance CEO said of the proposed DIFC venture.
Doha Insurance has already set up a joint venture insurance firm - Yemen-Qatar Insurance Company based in Sanaa.
"The Yemeni operation is doing very good. Last year, we had 20% returns on the $1mn capital we have paid. The capital has now increased to $3mn without any additional payment from our side. We are also getting yearly profits from our Yemeni venture. Our Yemeni partners are professionals; they know what they are doing," Hussein said.
Under the JV agreement, Doha Insurance is running the Yemen-Qatar Insurance Company. Doha Insurance also has picked up a 5% stake in a Jordanian underwriter - First Insurance, which Hussein said is a "very solid company".
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