Middle East regulators urged to work closely
Manama, February 9, 2011
With Middle East insurance industry set to grow throughout the coming years, regulators will have to act locally, regionally and internationally.
Speaking on the final day of the seventh Middle East Insurance Forum at the Ritz-Carlton Bahrain Hotel and Spa, Central Bank of Bahrain (CBB) executive director of financial institutions supervision Abdul Rahman Al Baker said that regionally regulatory authorities had to work closely with each other to promote corporate governance, collaboration and implementation of best international standards.
And they had to act internationally by co-ordinating with standard-setting bodies to further enhance the regulatory and supervisory standards, he added.
'CBB has played an important role in the founding of the Arab Forum of Insurance Regulatory Commissions (Afric), which brings together 17 Middle East regulatory authorities, and aims to promote collaboration, transparency and adoption of international standards among regulators in the region,' he said.
'The insurance industry in the Middle East and North Africa (Mena) region has grown to reach a level where it is ready to further enhance corporate governance and to prioritise risk management.
'The insurance industry plays an important role globally, as it contributes to more than $4 trillion in worldwide revenue.
'In addition, the macroeconomic trends of emerging markets like India, China, Russia, Brazil as well as the Middle East will continue to grow,' he said.
'As a result, the current demand for sound conduct of business and transparency, as well as the enhancement of policyholders and shareholders' confidence make the need for strong corporate governance for insurance industry globally and in the Mena region greater now than ever before,' he added.
'The current financial crisis can be to an important extent attributed to failures and weaknesses in corporate governance.
'Therefore, regulators all over the world should consider the issue of corporate governance very seriously as the world is in no position to face major, new shocks,' he said.
'While it is sometimes tempting for those in the industry to view corporate governance requirements and regulation as a burdensome imposition from outside, the financial crisis has been a reminder that markets need effective regulation if they are to operate properly.
'As a regulator, we at the CBB believe in creating a climate that encourages the development of a strong and sound insurance sector,' he added.
He said regulatory bodies in the Middle East should also prioritise other objectives to sustain growth in insurance markets, like education.
'They should encourage the building of a talent base and strive to enhance universities and private training centres to offer multiple insurance degrees and certificates to accommodate the needs of students and professionals and to target a wider range of individuals interested in pursuing insurance studies,' he said.
'This will guarantee the necessary supply of highly qualified talented personnel to meet the growing demands of market and regulatory authorities in the region,' he added.-TradeArabia News Service