How has the insurance sector in the GCC region been recovering from the effects of the pandemic and moving forward over the last year?

The region, being part of a global village, is not removed from worldwide conditions. It has its own specific challenges and opportunities, but in general, it faces the same challenges that the rest of the world and the insurance industry has been facing. As far as results coming out of the pandemic, the market has actually done very well from the bottom-line perspective because of two main reasons. First is that motor insurance is about 35% to 65% depending on each market. The second part is medical insurance. In terms of motor, it is obvious that people were not traveling and not driving, so there were less accidents and better results. The medical expectations were that it was going to do worse. But, in the majority of countries, maybe with the exception of UAE, COVID related illnesses and COVID itself, from vaccine to treatment, were government funded. In addition, it took hospitals a full year after COVID to really return to a regular mode. Most clients and patients were very reluctant to go to the hospital for minor illnesses. In return, the claims ratios and claims were at a minimum. That gave the market a condition where it could do very well facing a very difficult situation. The insurance sector reflects what is happening in the economy, at about three to six months behind. But it defied that rule during the pandemic and we saw better results than most of the industries because we deal with risks and losses. What also came out of this was a lot of rate hardening going up. In almost every single country, property rates went up. There were mixed results on medical mainly either staying the same, or actually going up anticipating the changes that are about to come in most of the countries. Motor has had mixed results. Rather than technical, a lot of it is from competition. Motor insurance went down in UAE, Saudi, and Oman, and went up in Bahrain and Qatar. In Qatar, almost all classes of business went up. In Bahrain, most of them either went up or stayed the same. In UAE, where the majority of it has to do with competition, most classes of business went down or stayed the same with the exception of property. The market is going through consolidation regionally, without exception. The insurance market is oversaturated with companies. In each country they are almost identical. There are about 25% of the companies taking 70% of the market share. That is an unhealthy way to go forward.

We have seen a lot of acquisition as well. GIG out of Kuwait took over AXA regionally. National Life out of Oman merged with RSA, Royal & Sun Alliance. Most of these deals are regional deals, not country specific. Saudi has had a couple of mergers and Bahrain as well. Solidarity took over T'azur and Al Ahlia in a span of less than two years during the pandemic. I predict that this trend will continue for the foreseeable future.

Braxtone is a product of the industry and in these tumultuous times and unpredictability, we have to ask ourselves what is normal? Are we talking about normal before COVID or are we talking about normal after the Spanish flu? What is going to be the normal way of things going forward? From what we see, it is going to be a year by year, month by month, day by day situation dealing with these changes and difficulties. The market here is showing that there is no room for small companies. There is no room for an independent provider. You have to be part of either regional players or part of a regional financial sector within the country itself. At Braxtone, we covered the entire region out of Bahrain and UAE at the beginning of the pandemic. During COVID, we went to Saudi and Kuwait and Oman through our services. But since then, we have taken over Afro Asian Assistance out of Oman and we grew their business there where we are the largest provider of assistance services, especially in roadside assistance and car replacement.

The difficult times that the entire market is going through affect not only private entities, but governments are also trying to deal with the biggest elephant in the room which is healthcare. Countries in the region are out of that business, whether by choice, out of better services more geared to a healthier country and society, or from the fact that the cost is going up every single year with no end in sight. However, the services are not necessarily improving with that. Still, each country has its own way of dealing with these issues. UAE will be fully privatizing the sector. Bahrain is going to have a mix. Kuwait is quite far behind on that aspect, but it is still on the table.

What is Braxtone’s strategy and place within the regional market? What have been new developments or divisions that you have introduced?

At Braxtone, we focus on what the market needs. We have shown amazing growth in the past two years, growing our staff by almost 200%. We have been pulled in each direction with the market needs and coming up with a strategy is our focus: how we are going to work and how we are going to provide the market with our expertise. The team has dealt with companies under distress and has been called upon in several countries. We spent a good part of this year really realizing who we are and how we can provide the market with our services.

We created four specific divisions. The first is insurance and captive management. Then, we have claims management and loss adjusting. Next is outsourcing and assistance services. The last division was somewhat pushed upon us to actually get into that market, which is advisory and consultancy. It is the big boys’ game. Having a company with less than 10 years of experience, it is very difficult to get into that space. However, because of our specialty, big consultancy firms started reaching out to us to subcontract these specific related insurance services. We still continue to work with them today; however, we started going into our own. The Saudi government was the first to approach Braxtone on insurance and foreign direct investment. Now, we have begun working with the Insurance Unit in Kuwait on seven projects to overhaul that entire market and really take it to an operational level that is not crippling to the industry. This is a major change that is happening now in Kuwait. We are now consulting private insurance companies as well. We are present on that focus in Bahrain, UAE, and Oman. We are in the process of obtaining the license in Saudi and Kuwait as well. As soon as the Insurance Authority allows us the new license, we are ready to go there. Qatar has been out of the focus of Braxtone simply because we were not there as individuals. I have never worked in Qatar specifically, nor has the executive team, but it was always on the radar. We are hopefully in the process of securing our first consultancy there, which will give us the ability to expand to these countries without physically be being there.

What has Braxtone been doing to become more digitized and technologically relevant in the sector?

Braxtone has always been a technology centric company. It is part of the solutions that we always provide. We are not a technology company, in that we do not develop technology, but what we do is find the right partners, find what their product is or we come up with a product, we enhance it, and we make it ready for use for the region. Even before COVID, we were working on the first private motor subrogation platform called Tasweya. It is in the final stages to be launched in Bahrain, hopefully by the end of the summer. It is truly a testimony to the team that with a product with zero income for the last three years, we are still working with the market to get it up and running. We have a few competitors that left the market, because creating a platform like this does not happen overnight. Braxtone worked very closely with the Central Bank of Bahrain and the FinTech unit has been extremely well supported by the Economic Development Board in Bahrain, EDB, to launch the first private market level insurance platform. That takes commitment and this speaks to the team, speaks to the resilience of Braxtone to take on difficult propositions to find a solution for the market. It shows that other competitors could not stand the time and effort and the challenges, where at Braxtone, we continue to try to add to the market where things are not easily available. It makes us who we are. But there are still challenges maneuvering through these difficult times while you are growing into new countries at the same time.

What products and services are you focusing on specifically with the many different countries where you are present throughout the region? How is each offering customized to the country that you are serving?

We spent a good part of the first half of the year focusing on knowing who we are and what we are going to provide the market. There were two things that we really wanted to establish. The first thing is that we are a group and we have to take advantage of that. We come from that background where the hub and spoke model is central to the delivery of our services.

We took Bahrain for very obvious reasons. The human capital available in Bahrain, bilingual aspects, operationally, the support from the government to grow businesses. There are government subsidies that enable you to come up with an idea and you can start a company within half an hour online. That is something that cannot happen in any other country in the region. Bahrain enables you that. Additionally, with the human capital available here, it made Bahrain the obvious choice to be the support services center for the entire group. Our entire back office is centralized in and supported from Bahrain, from finance to HR to IT to management. The second thing that we wanted to focus on was expanding to the entire region in a steady way, by growing each country on a satellite level and then going there with all or most of the services mentioned in our four divisions available in every country. We are not trying to change the culture where the support hub provides service. Each country is a customer and how you deliver the service to them is going to be different.

In Bahrain, captive insurance management is the center of our services. This is a highly specialized service and Braxtone is the only regional company who provides such services. We also provide roadside assistance, telemarketing, and secondment services providing insurance companies with qualified staff to offset any shortages or help them grow. We are an advisory as well. Our fourth division, which is loss adjusting and claims management, will come to Bahrain soon, as it needs a regulated license to be operating.

UAE has been great to me, personally. I started my career there out of college. It was the second market we opened in and it has been very gracious. We belong in UAE. It is a country that embraces people who want to make a difference. We have been operating in the UAE since 2017 and we are licensed by the Central Bank of UAE. We provide claims management and loss adjusting and advisory and corporate services to insurance companies brokers. We are servicing over 30 insurance companies in the UAE from multinational to local to reinsurance to Takaful Islamic insurance. I have a background in developing Islamic insurance since 2001. I helped AIG and several companies to establish their Shariah Compliance Services. UAE is going to continue to be, if not the biggest, one of the biggest for us in terms of production and number of staff.

Oman is a greenfield and the growth there is going overtake UAE very soon. Oman is hungry for the level of service that we are able to provide in the type of services and the level of details that we go to. In a matter of a year and a half, we went from less than 5,000 members to a half a million members. We did an acquisition there and when you do an acquisition you have to keep clients and you have to grow. We went from two insurance company clients to now reaching five clients. The level of detail that we came in to provide to the industry within Oman had not been seen there before. Because of our insurance background, we gave detailed reports that they did not know existed at that the level. In an emergency service, you do not want to use technology, for example, when your car breaks down in the middle of the summer. You do not want to fill out a form. You do not want to chat with somebody. You want a person on the phone. Technology and only using an app to yield services is not always best. When you break down, you want somebody to pick up the phone. I was with a client that we were trying to secure one day and she was gracious enough to take me to our next meeting and she got a flat tire. She called her provider and they did not pick up the phone. I was with her in the car and I gave her a Braxtone number to call. At Braxtone, 96% of calls get picked up within 15 seconds and there is a 100% call back rate. So, she called, we picked up the phone, she told them she did not have a membership, and they took her details. What made me confident to give the number to her to call is that level of service that we perfected, that service that Oman is hungry for. We are going with the advisory as a second service and we have had a very constructive meeting with the regulator to bring in the loss adjusting and claims management.

Saudi is growing amazingly. I cannot anticipate how fast or how different they are going to be. What I am certain of is that we have to be there with the services we provide. Saudi tends to want to see people on the ground. We have done this for two and a half years now. In Saudi, we will start with advisory services and consultancy and it might grow to claim services and roadside assistance as well.

Kuwait is a market that needs a lot of development. It is a bit behind compared to the rest of the region. But the newly established Insurance Unit is doing a fantastic job trying to get it to the next level. We have two companies now – one company is under complete restructuring under our advisory and another company is going through a major overhaul. Most of the region had single digit growth. In Bahrain, as well as most other countries in the region, it is driven by medical. But Kuwait has had double digit growth at over 26%. It is possibly a distorted picture a bit on whether this is due to the consolidation of GIG with the takeover of AXA or not, but the penetration is at a very low level. If things go in the right direction, motor insurance is going to increase at least 100% on the third party. We are looking at doubling the portfolio, essentially. It is obviously not going to be the same for other classes of business, but motor and medical insurance are going to drive growth in Kuwait, just like the rest of the region. In the next year or so in Kuwait, gross written premium will see a significant growth.

Qatar has always been on our radar, but lack of understanding of the market from our side was the reason for the delay. We are working closely with a partner on the ground to better understand it, and hopefully, we can have the first project in Qatar within a month.

Do you see a significant difference in the way Braxtone must approach the specific needs and preferences of each country you are present in, being a region-wide player in the market?

The GCC region is seeing challenges coming out of the pandemic similar to the rest of the world, but it has its own specialties and its own uniqueness. As small as they are, each country has its own way of doing business. This is where we try to go to local talents who understand the market. I try to educate myself about each and every market, on a political level, on a social level. I try to visit these countries at least once a month for at least the last three to five years. We are also bringing the team to be able to manage each country locally. Even as close as we are to these countries, the cultures are different. In UAE, you want a bilingual service provider. Oman is heavily concentrated on the Arabic. You see the same thing in Kuwait. It is a little bit better in Saudi. In terms of the cycle of sales, you have to understand when you are given a proposal how long it takes and that how it is done in each country is quite different. We are dealing with each country in a different way and we are humble for these countries to accept us. For us to be forcing our way of doing things can be crippling to any organization. Local talent, local knowledge is something that we take seriously. Because of my experience in the in the UAE, I am still head of the group and head of the UAE. Hopefully within the next three years, most of the services are going to be available in each and every country. We are looking at expanding beyond the region. We do not look at countries and geographies to grow into just for the sake of growing. We do not have the ability to go and change the need; rather, we respond to what the market needs and it has served us well so far.

How do you see the sector evolving in the region in the coming years?

One area that is going to reshape the region is mergers and acquisitions. It is going to be the highlight of the next five to seven years. This is going to be great for the consumer and great for services. I am all for competition. I cut my teeth in the US open market. But when it reached a certain level of competition, where it is only price driven because of the number of players in the last 15 years, that did not serve the consumer well. There were not any unique services that really made a difference. The consolidation, hopefully, will enable these companies instead of spending money on just acquisition, to have more focus on differentiating themselves from their competitors.

The other area that is going to also be a major headline is the privatization of the healthcare system which will see an explosion of premium coming into the sector. With that, the consumer will be more educated because most people have their motor insurance and a lot of knowledge about medical. But when most of your healthcare is done through medical insurance, you will have to understand it better, similar to markets like the US with Obamacare and the exchange system and how you choose it. With regard to healthcare, it is not a pure commercial transaction and it is not pure insurance. You can deny somebody who is hungry bread, but you cannot deny somebody going to an emergency room for treatment. In essence, it is not a pure commercial exchange of services. I understand the issue of cost and privatization, but it is a mixture of the two. Bahrain did well under the leadership of His Royal Highness, the Prime Minister and Crown Prince, largely because we have a government infrastructure to deliver these services for COVID.