Life insurance remains a tough sell in the Middle East and North Africa region, but changes are afoot. RGA's Tamer Saher spoke to Middle East Insurance Review about economic headwinds, product development trends, barriers and opportunities for the most agile competitors.
What are some of the key trends and issues life insurance companies are facing these days?
We are noting increased awareness of the importance of life insurance across all Middle East markets. We are also seeing heightened interest from Gulf Cooperation Council (GCC) citizens in supplemental pension products and individual retirement plans. However, the rising cost of living and slow economic growth are reducing disposable incomes, which is in turn impacting life insurance sales. The impacts vary from one market to another, with some insurers experiencing competitive challenges to their savings plans due to the high interest rates currently available on bank deposits. Other markets are challenged by the delay in issuance of life insurance regulations, leading to a freeze on all new product development activities, which is usually the main driver for life business growth in the region.
What are the biggest barriers to building trust that businesses are facing today?
Building trust has been a key challenge for the life insurance industry. Regulators in Middle East markets are ensuring that sales teams are not just qualified and trained to sell such products, but also put forth sufficient effort during sales processes to ensure customers understand all of a policy’s terms and conditions. These steps will definitely help in changing the perception and building trust.
Technology is being introduced at a rapid pace. How can life insurers ensure they capitalize on the opportunities, and mitigate or avoid the threats, in order to survive and thrive in this new digital age?
Life insurers in the Middle East should learn from the success journey of compulsory lines – motor and health insurance – which have been able to successfully build their technology infrastructures and implement effective online distribution. Life insurance, however, is a more complex product. Not only are there many policy frameworks and available riders, it is also a product where the sale must start with a needs analysis, making the process more difficult to launch and conclude online. The industry may need to start looking at artificial intelligence and big data to overcome the challenge of approaching the right customers with the right product at the right time.
Governments play a vital role in promoting motor and health insurance in the Middle East region. Can they apply the same approach to support the development of life insurance?
It is critical that governments understand the importance of life insurance and how life insurance can contribute to society. I recommend that a minimum amount of cover for at least each family head is required: covering the breadwinner of each family insures that in case of death or disability, the family will be able to meet its liabilities and won't suffer financially, which will reflect positively on the welfare of the entire society.
What is your outlook on life insurance in the region in the next few years, and what should the market be wary of moving forward?
The Middle East’s economy is still in recovery, which might lead to a static to marginal growth rate in 2019. However, expected high GDP growth in most of the Middle East countries and relatively stable oil prices will likely have a positive impact, which should lead to growth in the region’s life insurance business in the next few years.