Insurance Stimulating Economic Growth in Qatar

Elias R. Chedid, COO at Seib Insurance & Reinsurance Company LLC elaborates on the role of insurance in helping promote the rising economy of the State of Qatar.

There is no denial that a country’s economy is influenced by many interrelated and interconnected sphere of activities. A robust economy is one with a strong bonding between its active agents and one which embeds a strong core. A strong core assists in the sustainability of a strong economic sphere. In Qatar, we are operating through a vision set by His Royal Highness in order to sustain a strong core and its active agents. Insurance is, by all means, an active and important agent in this sustainability process that ultimately aims at the overall wellbeing of the nation. Successful economic policies rely on a process of cooperation between the various agents to improve each other’s results regardless of the factors that are external to that agent. This can only happen by maximizing the ability to perform at every level, with the right speed and with proper support from the governing authorities.

To expand on the role of insurance in an economy, I would like to refer back to the statement made by H.R.H. Prince Tamim Bin Hamad Al-Thani in 2008, where he assigned the Qatar National Vision 2030 to “the government, private sector, civil society and to all Qatari citizens”. Further, H.R.H. set the platform upon which the economic sphere should be molded within the nation as a whole. He assigned its frame of belonging and the calling was for all. H.R.H. specifically said, “I call on all to work hard and utilize your expertise to help achieve the goals of the vision and advance our nation’s development”.

The insurance sector has a major role in transforming this vision and in assisting in its implementation. Insurance is an active and vital agent in the coherence of the economic sphere, filling the risk gaps and ensuring continuity for businesses on a rainy day across all market sectors.
This proposition has been supported by many empirical studies. Not only that, but insurance companies are also big investors in companies, stocks and bonds, which help facilitate financial markets. The insurance sector in its entire active elements of the risk business –risk advice, risk control and risk taking – provides a form of an extended capital to other agents within the economy, thus protecting the business cycle. Therefore, for a business cycle to be continuous and operate in an uninterrupted manner, it needs the expertise of the insurance sector – be it regulatory, mediation or risk bearing. Purchasing insurance makes a business aware of the risks that it takes in its everyday operations. Therefore, it is more likely to have strong worker safety programs and is motivated to prevent losses. This side benefit of insurance protects workers from businesses who try to squeeze more profit out of employees or tolerate unsafe actions in order to increase revenues. Success is the end result of proper implementation and cooperation between the public and the private sectors. This can be executed by formal Public Private Partnership (PPP) programs or by simply setting regulations that the private sector needs in order to thrive. Such regulations are enacted upon through execution mechanisms,
which fall within the National Vision framework, help respect the pillars of foundation and assist in achieving the desired goals. A good example of
regulation can be cited in the motor insurance sector in Qatar. The requirement for motor insurance is very simple, yet its impact is wide and effective. It involves the government, the private sector, the civil society and the Qatari citizens. The role of the private sector is highly crucial in this aspect because regulation leaves major room for a basic principle of service delivery – competitiveness. While regulation sets minimum risk protection standards to be applied, it also provides scope for a wide risk to be assessed, priced appropriately and serviced by private insurance companies. Had we assumed to eliminate the role of private insurers altogether, it would have led to deteriorating service standards and increased costs to the consumer. Not only that, but it would have caused a ‘domino effect’ or negatively impacted other agents within the economic sphere. Improving effectiveness of implementing motor insurance regulation is a factor of time that involves all stakeholders and decision makers under the umbrella policy law. This is achieved by conducting regular meetings, where representatives of all insurance providers meet with concerned
governmental department representatives aiming at improving standards. Motor insurance for instance, can be considered as a precedent to other insurance lines. Competitiveness and the involvement of direct stakeholders are keys for a successful sector in the economic sphere. Not only that, but maintaining active involvement of each of the regulatory authorities, insurance companies and the insurance market as a whole in each and every line of the insurance business is imperative in achieving the goals of Qatar National Vision 2030. In particular, when services (such as motor and health insurance) promised are society-wide and affect individuals as well as businesses, it is expected that the insurance sector will face many challenges along the way.

“Improving effectiveness of implementing motor insurance regulation is a factor of time that involves all stakeholders and decision makers under the umbrella policy law.”

Crossing the threshold of these expected teething challenges started uniting the financial sector’s regulatory authority under the Qatar Central Bank (QCB). Enforcing effectiveness of market activity under a single insurance regulator usually necessitates the support of several other governmental institutions and departments. This is needed in order to avoid duplication of rules and instructions that may distort an efficient ‘modus operandi’ of a transformation plan within the thriving insurance sector. Many insurance companies in Qatar are managed by astute and perceptive individuals. Their collective experience and knowhow is a major asset to the growing sector. This works in favor of Qatar’s National
Vision 2030 that can be optimized when implementing nation-wide mandatory insurance schemes, such as health insurance, where the culture of competitiveness can result in improving the climate of entrepreneurship and bring about creativity and innovation in product and service delivery. Risks can arise naturally or can be created. But insurance policies can only be underwritten and thus designed to suit every need. In a growing economy like that of Qatar’s, exposure to risks grows as well. Thus, private insurance becomes all the more important in strengthening the economic core and in assisting in bonding the economic agents. Hence the need of the hour is in investing in concocting solutions whereby competition drives away any existing monopolistic traps, particularly in service intensive products. At the same time, it also sets the tone to strengthen measures against catastrophic risk exposures and subsequent disasters that may erode the economic sphere and thus impede growth. For example, insurance policies allow businesses to replace their buildings and inventories in the event of a major catastrophe such as an earthquake or a hurricane.

At Seib, we take Qatar National Vision 2030 extremely seriously at all levels of the organization and align our resources accordingly. We have ensured to make our technical and market capacity available to commercial as well as public and individual risks within the rules and regulations of the Qatar Financial Centre (QFC). We focus on promoting individual talent within the organization and in the civil society. To promote talent and increase the profile of insurance in the State of Qatar, we have organized training and development programs for Qatari youth in association with prominent institutions in Qatar. We aim at achieving growth by fostering creativity and innovation in insurable risk protection solutions, which are delivered by highly skilled specialists operating with intellectual integrity.

“In a growing economy like that of Qatar’s, exposure to risks grows as well. Thus, private insurance becomes all the more important in strengthening the economic core and in assisting in bonding the economic agents.”

Elias R. Chedid, COO at Seib Insurance & Reinsurance Company