E-Takaful Is The New Buzzword

Younis Jamal Al Sayed, CEO of Takaful International Company began his career in 1981 and gradually learnt the various aspects of the insurance industry. ARIG had a significant bearing on his career portfolio as he successfully rose through the management hierarchy.

Takaful is changing the face of the Middle East and Younis Al Sayed is in pursuit of his quest to find the ultimate formula for Takaful business.

BL: Younis Jamal Al Sayed, 2010 was a busy year full of financial events. I would like to start my interview with some personal questions, how did you build your business reputation and what are the reasons for your outstanding success?

Al Sayed: I started back with the Arab Insurance Group (ARIG) in 1981. At that time, I didn’t have any idea what insurance was about, but when I joined ARIG, the company invested in its team generously and sent us to study at the College of Insurance in New York, USA. It was an intensive course wherein we covered all sections of insurance business, from property to marine, to aviation and others. Honestly speaking, before that time, I didn’t like the subject of insurance, but when I really started my insurance studies, I felt that this industry is a different world. For me, it was a very interesting subject because in the United States, the awareness of insurance is a necessity. If somebody walks in front of your house and accidentally falls in the street, he could sue you and if you don’t have insurance coverage then it will be a catastrophe. On my return from New York, ARIG sent me to gain vital work experience in London markets and I worked in Lloyd’s for three months and then spent some time with Skandia Group Insurance Co. Ltd. I also worked with the “La Réunion Aérienne” company in France. When I came back to Bahrain I spent three months working with Al Ahlia Insurance Company and this is where I studied insurance and gained my knowledge and experience in the insurance sector in the Middle East.

I specialized in insurance and worked in the aviation department whilst I was at ARIG. My boss was Mr. Trevor Church who is one of the very well-known aviation experts in the international market. He presented the insurance information in a very appealing manner. I joined him on many business trips around Europe and the United States and became well-known in the market for that class of business. Besides Aviation, I further specialized in space and satellite insurance, aircraft insurance, airport liability insurance, aerial application insurance, products liability insurance and manufacturer's liability. Truly, ARIG and its team of experts was a great school of learning for building my career path. In 2000, I joined Takaful International as assistant general manager looking after the business development side. I worked with Takaful International for two years, then I was approached from Dubai International Financial Center (DIFC) to join them and establish an insurance and reinsurance sector at DIFC. I joined them for two years and I was the first person to establish an insurance and reinsurance sector in Dubai as well as recruiting qualified staff. For personal reasons, I left Dubai in 2003 and came back to Bahrain and rejoined Takaful International as the head of the company. I have dedicated all my experience, skills, and strategy to achieve goals for the company. Till date, our accomplishments are the stepping stones for my futuristic vision and ambitions for Takaful International.

BL: Are there any dreams that you have not yet achieved? What are your most significant accomplishments?

Al Sayed: It is not only the figures which can talk about a company. There are so many things that are tangible. People who are short-minded are looking at the bottom line. And if you want to achieve this, you can easily write business. They can write so many other classes of business, but this is not my viewpoint of doing long standing business. I can increase the premium by writing the right account, and having a good result which actually reflects in the bottom line when it comes to the figures. I can also build the team by training them and sending them abroad as well as hiring a team consisting of fresh graduates. This is actually an area where people say: “no, we will spend some money training people and then they will leave us and go elsewhere.” These new comers always come with good new ideas which we maybe lacking. I aim is to see quality management with profit at the end of the day, and that the company is achieving our vision. Quality management is an area where not everybody is actually looking at. The customers who come to insure their vehicles spend 45 minutes waiting for their papers to be processed; presently we reduced it to 20 minutes. I want to improve this area and bring the processing time down to 5-7minutes only. This is the kind of quality I am talking about. I am looking into an area which is tangible for me but for others who look at figures, they will not feel it. I have to work hard on these things. There is a big improvement internally. In 2011, I want to spend more time and effort inside the company, not outside. We are launching e-Takaful softly as the plan is to go official in the first quarter of 2011. In this regard, we are planning also to work on the marine and the personal business. We are the first company in Bahrain to launch e-takaful. Also, we have e-bidding, it’s a very transparent process, everything is displayed on the screen, you go through the system and everybody is going to put his price for the motor insurance. This is not Younis’s idea; this is my team’s idea. I am actually only giving them the support, I push them to achieve what they have in their mind.

Furthermore, we are very optimistic concerning Qatar; very soon, we are going to get the license officially. But, there are a lot of things on my mind and it’s a step-by step process.

BL: It is also known that you like to contribute to the growth of Takaful. Are you content with the present status of the Takaful Insurance companies and what were the 2010 achievements and what are the plans for the year 2011?

Al Sayed: I am actually one member of the Takaful industry. I believe in Takaful although there is a lot of criticism of the system itself. We conducted a comparison study on the Takaful system in Kuwait, Qatar, UAE and Bahrain because there are changes, or variances. In Kuwait, takaful companies distribute the bottom line, the profit, between the shareholder and policyholder. Qatar calls it “Mudaraba system”. In Dubai, Salama and Aman are working in a different concept. Bahrain has a system because of the AAOIFI and the Central Bank and Takaful International was the first Islamic insurance company. The growth is not only in figures, the growth is actually in coming up with a system where it is acceptable by all parties and it is for the benefit of the industry. Takaful worked very hard in coming up with these concepts and ideas.

Takaful International-Bahrain is going to have not less than 53% of Takaful premiums from the Bahraini market; this is a contribution to the industry of Bahrain. We have plans to encourage the re-Takaful company to have better rating and to have improved services. This is all contribution from us to the industry. I would like to see Takaful International growing more than that, because we are interested in Takaful system, the re-Takaful and the retro-Takaful. Retro-takaful is a new concept, nobody even talked about it before, it is the retrocession. The industry wants actually to limit the placement from Takaful, to re-Takaful, to retro-Takaful. It doesn't want it to go to the conventional market; they want it to remain within the Islamic industry.

Takaful companies have to carry more retention and work hard. If you take for example Kuwait as a market, there are 13 new Takaful companies. They work hard but I think that it is always difficult for a new comer to compete with the big players in the market and retain their business portfolio. In Kuwait, there are 5 big companies and it is not an easy job for the thirteen new companies that came later on, because they are going to get a small piece of the cake and they are going to grow by writing more Takaful business. Bahrain also granted licenses to new comers like Allianz. Also in Dubai there are 64 companies at the moment and Qatar too has many companies but I feel presently they are not giving licenses to new companies. There is growth in the Qatari market and Abu Dhabi market, but these companies have to increase the retention and increase their capacity in writing business. This is going to happen if we merge some companies. The regulators should try to come up with rules to encourage mergers and acquisitions to move towards bigger capital and capacity in writing business and higher retention power. When it comes to Takaful International- Bahrain, we have written better business than last year. We are working on new products for the year 2011.

BL: What is wrong with the Arab insurance and reinsurance companies?

Al Sayed: As I said earlier, there are a lot of craps recommendations in every conference you attend; you want these recommendations to be implemented. Increasing the retention and the capacity is one of the most important things. I would like to see more cooperation between the Arab insurance and reinsurance companies; and instead of the business going outside the region, it should remain within the Arab market.

BL: Younis Jamal Al Sayed, please tell me of a conflict you were involved in at work and how it was resolved. How did the work performance continue after that?

Al Sayed: There is an incident about a small problem that we encountered with a hospital in Bahrain. In my efforts to resolve this problem, I asked for a meeting with its management and they refused to meet me. Later on, with the assistance of a friend I was able to set up a meeting with an American board member. I went with my friend and when we first entered the hospital, the board member told me: “you are not very welcomed here. He did not even offer me to sit down in the meeting room or inquire about refreshments”. Then, I tackled the matter diplomatically with an open mind. Having the board member from New York- United States, I found a subject where I can converse about the College of Insurance where I had studied. I tried to break the ice to resolve the problem. Then he offered to take me to his office with the rest of his team. Now, this board member is a close friend and invites me to accompany him to the rotary club. I never overreact; and always strive to be cool and flexible in the face of adversity.

BL: Does Bahrain do better than other countries in the present recession and the global financial crisis and why?

Al Sayed: I think Bahrain did a good job by actually trying to make the industry feel that they are part of the problem. I am sure there are mistakes, we are all humans at the end of the day but there are rules and regulations that we have to consider. So the banks and the insurance companies took provisions for any investment which goes above 30%. This is an area where governments are also trying to encourage the merger of companies and banks; they are trying to help and solve the problems of many companies in the industry. There is growth. If you look at 2008 there was a growth of 3%; in 2009 there was a growth of 4%; in 2010 they expect to see a growth of 5%. Consequently there is growth and this means that there is stability in the market. Do not forget that only recently Standard & Poor's Ratings Services has affirmed its 'A' long-term rating on the kingdom of Bahrain and this is a good indication of stability.

BL: Major European insurers are eyeing a move into the market for Islamic insurance, or takaful, how do you see their success?

Al Sayed: I cannot comment on whether they will have success or not because of what happened in their market in the last 2- 3 years. Although it was assumed that the Islamic banks and takaful institutions are away from the recession it has not proved to be true. Most of the banks (on the conventional side or the Islamic side) have been affected badly because they are all linked to the international system. They invested their money outside of the region either in the European market or in the United States. A lot of Islamic banks are facing financial difficulties. There is big growth in the Islamic finance, bigger than that of the conventional because the Muslim population prefer to put their money in Islamic institutions. This growth is due to the increase in oil prices, as a lot of money came from the West and is invested here in this part of the world and takaful was growing between 15%-20%. So people said: “this is the right time to put our money”. But there is an important point that they should consider and that is the return at the end of the day. It is not only the growth. If I am writing business, I am not going to write because Takaful grew from 3 million to 15 million. This is growth, but what is the bottom line? What is the return? When I am going to get it? They should look more deeply into the system

There is not enough capacity in re-takaful. The whole capacity does not exceed 20%. So, still you need another market. This is where the retrocession market is needed. Thus, who is going to write 2 billion dinars when I want to insure my business or the electricity business in Bahrain? Not a single company can write BD 2 billion, either direct or even reinsurance. So, it has to go to the retro-market. Retrocession market is part of the big volume surplus business above my capacity.

BL: Do you see that Takaful International one day doing a re-takaful business?

Al Sayed: This is a good question. We are looking into this at the moment. We did not actually sit down with a consultant and look at the figures as yet, but it is on our mind.

It is one of my ambitions because I came from a reinsurance background. This is my strong point. I feel I can give more on reinsurance than the direct insurance and am hopeful to see Takaful International writing re-takaful business. The re-takaful system will be completely diverse in comparison to the takaful process.