Regional insurance sector faces challenges
Manama, February 9, 2011
The region's insurance sector will need to adapt to a changed business and regulatory landscape, experts said.
As markets become more global, business opportunities in the sector are poised to increase. However, there will be significant challenges posed by a new world order of business, experts from professional services organisation Ernst & Young told delegates at the seventh Middle East Insurance Forum in Bahrain.
Over the next two years, companies across all sectors and markets are expecting the new economy to be even more competitive than the old, according to a survey of over 1,400 senior executives from around the world conducted by Ernst & Young.
How regional insurance companies need to, and are responding, to these new challenges was the focus of a discussion led by Ernst & Young Mena insurance leader Justin Balcombe and business development leader Jeremy Hallett at the forum.
'Regional players are beginning to feel that market volatility and risks have increased, leading to operational challenges,' said Balcombe.
'Additionally, continued price erosion and increased cost of key inputs is putting pressure on diminishing margins.
'It is evident that insurers will need to move towards a more comprehensive view of cost reduction than they had in the past,' he added.
'A majority of respondents in the global study are seeing a decline in regional demand, while 80 per cent are reviewing their market footprint, factoring in global expansion to meet revenue targets.
'Emerging markets remain the first port of call. Operators with foresight are either planning to merge and acquire competitors to increase market share, or forging alliances with market leaders to accelerate market entry.
'Given the complexity and increased competitiveness in emerging markets, we are likely to see companies focusing additional attention on existing markets as well, where opportunities for short-term profit are greater,' he said.
Product innovation, target audience segmentation and opening new distribution channels are some apparent enhancements operators are looking at,' he added.-TradeArabia News Service