The insurance industry in Libya is going through a transition period but the country’s oil wealth is bound to drive investments in almost every sector of the economy. “Al Qafela builds on its current and future clients with expertise, high quality insurers and reinsurers and offers tailor-made services and products,” says Abdurazag I. Almegerab, Chief Executive Officer of Al Qafela Insurance Company. Almegerab has 41 years of management and insurance experience and he says that his new plans will be aimed at new opportunities and new ventures amidst the expected economic boom of his country. He is methodical in his work and is fully aware of the current market scenario as he tries to get ahead of competition. Almegerab holds a masters degree in insurance from West Hartford, Connecticut, USA.
BL: What are your current plans? How do you see the future of the insurance and reinsurance industry in Libya?
Almegerab: We were expecting to progress a little bit during the first six months of this year, but as foreign companies are reluctant to enter the Libyan market yet due to concerns over security issues things are not really going well. However, we’re optimistic about the second half of the year; the country will be in a better position for the re-development. The future of both the country and the company is promising because the country needs a total renovation, new roads, new infrastructure and all kind of public and private services.
Many projects were suspended, like roads and the planed Tripoli underground metro. Other than that, there is Tripoli international airport to complete, renovating the sea ports, oil and gas terminals and oil fields. The country needs funding to pay for the expenses and costs of the rebuild for the next 5 to 10 years. These necessary mega projects will add value to the performance of the insurance and reinsurance industry.
Libya presently does not have a reinsurance company and it is not predictable whether the private or the governmental sector will establish a reinsurance company. I don’t see it happening in the very near future. That is unless the government allows foreign companies to enter the Libyan market. For example, if foreign companies will establish branches from their main offices or have joint ventures with Libyan insurance companies, banks or funds. These are all expectations and rumors but until now there isn’t really a feasibility plan or a real strategy put on paper.
Further to the need of a reinsurance company there is shortage of data and expertise, the available expertise are scattered among 13 direct local insurance companies. Some new companies don’t even have reinsurance treaties with big companies. Consequently, I don’t expect a reinsurance company to be established sooner unless the Libyan insurance companies import experience from abroad, either from the Arab states or Europe. I support this idea of importing the required experience and expertise from abroad for the next 5-10 years until the new generation take on insurance as careers. Libyans should study insurance and reinsurance and establish training institutions that might reduce the shortage of experience and the human resource requirements for the companies and the market. The human resources element is the main point because Libyans might have the money and the capital to establish a reinsurance company but they do not yet have the required human power with the right skills.
BL: What are your career goals and what did you achieve from these goals?
Almegerab: Al Qafela Insurance Company was established in 2009. The entity and operation of the company was suffering from external forces dictating the company’s strategy. This is because 97% of the capital of Qafela Insurance Company is owned by Sahilo and Sahara Bank which was controlling and holding the management back from moving freely with its decisions. We cannot even hire an employee or buy a single paper unless we go back to them. This system is not good for any company, but now I heard that the board of Sahilo Sahara Bank has been changed, in the General Assembly meeting for the bank in Tripoli, both the Chairman and General Manager have retired or have been set aside and the structure of the board has been changed and a new Chairman and a board appointed, this change will also be affecting our board.
I heard that the person that is presently in charge of the bank will look at the company in a different way because the company needs to be treated as a separate entity from the bank. We should also have a separate headquarters with an independent management so we can carry out advertising and media campaigns to boost the image of Qafela Insurance Company.
BL: Do you approve of the present location of the company?
Almegerab: I’m not really approving this but it is costly to move to a new headquarters. A new location might be good but the cost is very high for a new company, keeping in mind that there are 13 insurance companies already exist in a country where the economy is very slow. The value of the premiums for the country are the same as in the old days and consequently the cake which had been divided among five companies in the past, is now divided among 13 companies. Subsequently, it’s the same old cake because there is no development in the premiums but the income is getting smaller due to the increase in the number of the local companies. Qafela Insurance Company has many overheads and expenses like high salaries and high rent and it is really a big challenge to bring the required income to meet this high costs and expenses.
Presently, many people are armed and that’s why the conflict has increased but we know that this will be resolved in the very near future and if everyone will hold their horses for a while then the hard feelings will dissipate.
BL: What was your major accomplishment? What was your biggest frustration?
Almegerab: The war is very frustrating especially that we did not close the company during the war except for 10 - 20 days at the time of the liberation of Tripoli, but other than that we were working hard almost every day while other companies were closed down. We generated at least 4.5 million Libyan Dinars and the year before we had 5.25 million Libyan Dinars. Our frustration was that everybody was suffering physically and morally because we were worried about the future of our kids and the future of the Libyan people. We saw people killed and wounded everywhere and houses were demolished.
BL: What are the special projects that you pride yourself in?
Almegerab: The special project that I pride myself in is establishing Al Qafela Issuance Company. The worst thing is that it’s not going well the way I wanted it to go, but establishing this company was really a big achievement and I think if we are left to operate freely, we would have done much better than we did. We’re looking into changing the structure and the charter of the company; we don’t need for example two Deputy General Managers for the General Manager and another General Manager in charge of planning and development. The company needs to reduce costs and expenses in order to meet its income.
BL: How would you rank Al Qafela Insurance Company?
Almegerab: I might rank it as the fourth company for its income in Libya but as the second largest company in the paid-up capital. It has a big potential to become the second largest company in terms of capital if the management takes full charge of its plans in allocating the right human resources and reducing its costs and expenses.
The necessary steps to a successful leadership in the insurance industry must include hard work in order to achieve the set goals. It is also important to set a good strategy in order to get a good share among the new companies because I believe that we can easily get a lead by improving our technology and introducing new products. Libyans are asking, especially after the revolution, for Islamic insurance products. We are now putting down into writing the plans of the first Takaful window.
Hence, Takaful insurance will be coming to Al Qafela Insurance though there are some obstacles in the way because there is no article that controls the Takaful insurance companies in Libya and specifically when it comes to getting a license. There is Takaful Insurance Company which is now working in Libya, its name is deceiving; the company is not really a Takaful insurance company and they are not licensed by the government to practice takaful insurance. Many companies are complaining about it because their operation is not Takaful.
BL: How will the present political situation in the MENA region affect the insurance and reinsurance industry?
Almegerab: This is concerning the Arab Spring; our region will get stable by concluding the proper elections in Tunisia, Libya and Egypt then there will be a boom which will lead to the development of the insurance and reinsurance industry. I see that the future is very bright. Therefore, the effect is positive though it might take a little time but eventually it will happen. An important development for the insurance industry is that life insurance will be introduced. In addition, takaful insurance will have a bright future in Libya, Tunis and Egypt. In Libya, the banks are working on Islamic banking. We are also trying to contact them to see how we can work together. Takaful insurance companies and Islamic banks might cooperate.
BL: Will the present financial crisis put the brakes on growth in the insurance industry?
Almegerab: Yes, it is just like what happened in Libya now. Al Qafela Insurance Company and other companies have been suffering from the lack of business growth and also from the people who are not well educated to deal properly with this crisis. They will accept just whatever comes to them and there’s no resistance, they don’t do anything that puts barriers to these losses.
In Libya, there should be training centers to develop human resources and introduce the insurance concept to the new generation and educate the entire public. The public is not really aware of the importance of insurance. Hence, the Libyan Insurance Union should raise awareness campaigns and conduct marketing campaigns.
BL: How will the Libyan and Arab governments help the insurance sector to survive this financial crisis?
Almegerab: By changing and introducing new laws and regulations and by lowering taxes. This type of change might help the insurance industry.
BL: What major problems or changes is the Libyan insurance industry facing right now?
Almegerab: There is nothing that has been changed, the laws are still the same and the institutions are still the same but there are new comers to the insurance industry and most of them are inexperienced, this will cause a problem in the future, where they will compete and lower the prices. The terms and conditions are not well formulated and consequently the insurance market will suffer due to the unfair competition and lack of regulations.
BL: What is the mission of Al Qafela?
Almegerab: Our mission is to develop the market and have fair competition among the companies. We try to convince people to understand the economic and the financial situation of their own companies. An insurance company is not just there for collecting money and premiums because companies also carry risks and I think that this feeling is not there in several companies.
A number of companies pocket the premiums and spend these monies as their own money; the premiums that the companies are getting are not really theirs to spend freely.
So this is our mission to help to convince those people and also to discuss with other competitors and our partners in the market to develop a good insurance market. Insurance companies should not think that it is the responsibility of the government to put ceilings and organize the market. Insurance and reinsurance companies should at the very least participate in this.
BL: What goals or objectives need to be achieved by the end of 2012?
Almegerab: We have been suffering over the past two years and thus we have at least to make some profit or break even.
