Walid Jishi, Chairman and Chief Executive Officer of Arab Loss predicted the chronic need for native loss adjusters in the Arab World who understand the political and cultural business environment to provide the service that was dominated by foreign adjusting practices.
He believes that loss adjusting is a notable profession that involves various disciplines and knowledge. Loss adjusting framework encompasses investigation to evaluate the extent of damage.
BL:As one of the leading Arab Loss Adjusters, what pushed you to start your company with a focus on the Arab industries?
Jishi: As a former insurance man, I found out that the services for the insurance industry are dominated by westerners. I also noticed that there is a gap between the cultural understanding in the Arab world and the internationals who handle insurers’ claims for the area. I took the challenge although I knew that it is a very difficult task. I found out that we have to generate local and national loss adjusters within the region. At that time, we had few individuals who took the lead, and I give them the credit especially the first prominent adjuster George Akra (Co-founder of Ikbis). I started Arab Loss Adjusters Int’l Company after recognizing the need to bridge the gap between the insurance industry and the insuring public’s expectations, and hence resorted to a conceptual understanding by interaction with the international practices in both UK and United States in order to forge a better school of thought and not to copy what others are doing. Fortunately, the economic development in the region was a driving force and a catalyst to my success. I started as an individual from a one-man-band in 1981 to an orchestral strength.
BL: Walid, what factors helped in the growth of Arab Loss Adjusters Int’l Company locally and internationally?
Jishi: In principle, we recognize the support of the insurers in the Arab world and the international reinsurers who have given us a welcome hand because we have charted a consistent business model that responds to the local and regional business without compromising the international standards. The reinsurer’s recognition and the support of the local insurers in the Arab region have helped us to pave our way towards prosperity and success.
BL: What does a loss adjuster do and how do they differ from a loss assessor?
Jishi: It’s an excellent question, which I addressed on various occasions and seminars. Loss adjusting is a very noble profession. The role of the adjuster is to investigate the circumstances of any loss that may give rise to a potential claim, then evaluate the extent of damage in terms of financial cost, interpret the policy of insurance including its coverage, its warrantees and clauses, and determine whether there was compliance thereto. After these steps, the loss adjuster reports to the insurer recommending the terms of settlement, which should reflect the fair and equitable indemnity value. Occasionally, the adjusters use the term negotiated settlement, a process I don’t like to use because I always say, we do not have to negotiate, and we have to give the fair and equitable value of loss according to the policy conditions. Hence, the loss adjuster must have a multi discipline of knowledge ranging from engineering, contract law, insurance, accountancy, and most importantly human behavior because every person and every claimant has a unique personality and unique attributes. Hence, the adjuster’s mission is not easy and at the end he has to maintain impartiality between the policy holders and the insurance company, whereas the loss assessor is commonly a person who has certain general knowledge to assist the policyholder in determining the value of loss and sometimes to act as his representative, but he is not necessarily involved in interpreting the policy coverage. Therefore, the role of the loss adjuster is much wider and demanding and its importance comes to light when we have potential losses or catastrophes due to earthquakes, hurricanes, cyclones, etc and have to deal with hundreds or thousands of losses similar to our experience in Oman, where human behavioral skills come into play. We are under moral obligation to deliver the promise of insurance contracts and preserve the social value of insurance.In brief, the loss assessor is the person who will be hired by policy holder to ensure that he gets an appropriate compensation, whereas the loss adjuster is the person assigned by the insurer to deal with the policyholder’s claim in an independent manner.
BL: Is it true that presently your company is one of the largest Middle Eastern loss adjusters in this domain?
Jishi: Objectively speaking, the answer should come from the industry. As a hint, we operate in nine Arab countries and we are expanding horizontally in 2011 to another three countries and we have partnerships across the world through a dedicated network. We are founders and partners in the largest international partnership across the world which is VRS and I am on the board of directors. We have been recently voted by reinsurers as the high-recommended adjusters in the Middle East according to the survey conducted by intelligent insurer which was published recently.
BL: Does Arab Loss Adjusters Int’l Company as it stands now fulfill the expectations you had when you first started the company?
Jishi: The expectations are much bigger despite the satisfactory achievements. I have a dream to see Arab loss adjusters and even other adjusters in the region able to position themselves in the market and stop or reduce the reliance on foreign adjusters. I have named the company Arab Loss Adjusters Int’l to reflect my commitment to the emerging Arab professionals, and it gives me pride to continue holding this name despite a preferred perception by some circles steered towards a foreign name. Notwithstanding, we will continue to expand in the Middle East and North Africa region (MENA), whenever the economic and political situation permit.
The end of the dream which should have come true two years ago, but was constrained by the economic crisis, is to see Arab Loss Adjusters Int’l a big holding company, whereby more resources can be made available to give the share holders the opportunity to enter new areas of business, diversify and expand by making acquisitions or taking over stake in foreign companies especially the emerging Asian and African markets. I am still optimistic that the situation will improve at both an economic and political level in the Regions so that we can then launch the IPO of the holding company which will take over the family owned Arab Loss Adjusters Int’l.
BL: What are the 2010 financial results and your expectations for the 2011 financials?
Jishi: In the year 2010, we witnessed a growth in our operations by nearly 43 % over 2008/2009. It was a very good profitable year and proportionately exceeds the ratios achieved by the well known International competitors.
Let’s be realistic, we do not expect 2011 to be as good as 2010. There is a change in the business. There are certain classes of business across the region which are now being almost discontinued like engineering. Engineering always represented about sixty percent in the whole region’s business. Even for the reinsurers, it was the highest class of business after motor. Now it’s much less and I think that will affect us as well. We’re pushing towards personal lines, I call it micro insurance in order to compensate. Insurers have to go into micro business in order to compensate the loss in revenue and premiums from the engineering business and from the mega risks. We will not witness the construction of a new big shopping mall like Dubai mall or like Al Seef mall in Bahrain, it’s over. Presently, the insurers have to offer new products and new lines of business, in particular, domestic and personal lines that generate a consistent flow of premiums, this will indeed move the adjusters from the arena of big losses to moderate and small losses, that will work on economy of scale. As a result, we expect that our revenues will be slightly below the expectations.
Well, we have empathy. Companies always can digest the shocks, and we are responding to the shock by expanding to new markets and deploying technologies to enhance the efficiency and reduce costs. The expansion to new markets will give us the momentum to re-align and digest the effects of the turbulence as you call it.
BL: What are your next plans amidst this turbulent Middle East?
Jishi: As far as I’m concerned I’m optimistic. Noting that we have always been followers in the Middle East, and work on ‘copy and paste’-we do not invent, we do not manufacture but once we secure the right to act and speak freely then there will be certainly a room for innovation. If we can not invent, let us retrieve and learn to reinforce our industry, create new job opportunities and give the creative individuals the chance to innovate and generate ideas for new classes of business. It’s my vision to see insurers in the Arab world moving forward towards solidarity, and increasing their efficiency and financial strength to secure higher retention of the risks. Previously I said that we have good reinsurers in the world who are supporting and honoring their contractual obligations, but that money which they pay back, goes back to their country for the purchase of products and services to enhance their economy and create new jobs. This places us in the realm of the messenger transferring the money from here and back.
BL: In what ways can Arab Loss Adjusters Int’l Company operations be enhanced?
Jishi: Arab Loss Adjusters Int’l build for the future, continue to breed new generations of native adjusters to solidify its position in the respective markets and for that purpose have initiated the ALA Academy which is a self funded foundation, offering theoretical and practical studies, with the objective of qualifying professionals for the industry and provide the Arab markets with highly skilled insurance and adjusters personnel. Beyond that, ALA Academy is committed to creating awareness amongst the insuring public.
BL: In what ways can Arab Loss Adjusters Int’l Company operations be enhanced?
Jishi: Arab Loss Adjusters Int’l build for the future, continue to breed new generations of native adjusters to solidify its position in the respective markets and for that purpose have initiated the ALA Academy which is a self funded foundation, offering theoretical and practical studies, with the objective of qualifying professionals for the industry and provide the Arab markets with highly skilled insurance and adjusters personnel. Beyond that, ALA Academy is committed to creating awareness amongst the insuring public.
BL: How do you keep your company growing?
Jishi: It’s by having loyal people working for the company over long continuous years. We have staff that completed twenty eight years of work with Arab Loss Adjusters Int’l. We do not work like the internationals who employ staff on contract or franchise basis, and that is why the history of adjusting in the west continues to witness the rise and fall of adjusting empires.
BL: What do you comment on UAE’s and MENA’s economy and insurance industry?
Jishi: The insurance industry in UAE is dominated by eight national companies but still we witness the entry of new companies. Foreign companies are there, competition as well is there, the quality is degrading, and the innovation in terms of product is actually coming from the foreign companies, not from the National companies. We need solidarity, we need financial strength and we need to invest in developing the skills of employees, and above all, I hope, move towards a common market.
There are government regulations but there is no industry self-regulatory environment in the whole Arab world. We don’t have common understanding to fair claims handling practices. We do not have guiding rules for overlapping coverage’s and dispute resolution. Regrettably, we don’t have the spirit of working together, and I hope that we will start addressing these common objectives.
BL: What are the differences between today’s insurance industry and 10 or five years ago?
Jishi: Well, there’s big difference. Ten years ago, the insurance companies used to dominate the market, but now the market is dominated by the brokers and this is a big leap. Despite the benefits there are certainly pitfalls that due to the licensing criteria whereby certain brokers are merely sales people running after their commission, but do not understand the theory of risk handling, nor can identify with the client’s needs. Furthermore, deviation from the trend of having a qualified proposal form is widely observed which gives rise to misrepresentation and lead to disputes. Further, policies are written to include warranties and clauses that are not relevant to the cover and extended to eliminate the duty of the Insured after a loss as in the claims preparation clause. In brief, modern policies are over saturated with riders that in most instances are irrelevant and subject to ambiguous interpretation.
BL: Is there a way to limit loss?
Jishi: Of course, Arab Loss Adjusters have a risk management department. The objective of the risk management department is to assist insurers and policy holders, understand the risk, analyze it, identify the probability of occurrence and most importantly assess and implement risk control measures. I always say there is no way to avoid a risk since by not doing a certain act, we move to a new state of risk but can limit it as in the segregation of exposure units or effective safety measures. The most important element in the risk limitation is the human beings who design, build, run machines, carry out the maintenance and so on. Humans are the first and last link in the risk handling techniques.
BL: What is the best way to fix Middle East insurance?
Jishi: Well, that is a big question. In short, I do not believe that rules and regulations alone can fix the market. There must be interface between the regulations and the self regulatory environment that is created by the insurance body.
The prosperity of insurance is significant to the economy and encourages investment and creates new jobs. Once the industry flourishes at micro and macro levels, we will be on the right track. Despite the constructive criticism, the achievements of the industry so far give us a sense of pride. We understand that the mission is to generate profit without deception or fraud as stated by Milton Friedman, but above all to discharge its social responsibility.
BL: Do you think that our economies need a reform?
Jishi: The economic reforms are an ongoing process and the Arab world certainly needs reforms, and the best reform is the creation of a common market which will enhance the cross border trade and investment, create new jobs and allow the natural human movement. Certainly we need reforms to combat corruption, we need reform to implement governance, we need reform to upgrade transparency and most importantly in my opinion, we need an effective income tax to align the consumer behavior starting from waste management to corruption. We need to nourish the minds of the humans to accept responsibility and be proud to where they belong.
