In a 45-minute sit-down interview, a BUSINESS LIFE reporter had the pleasure to discuss a multitude of topics with one of the foremost leaders in experience and content strategy for the insurance industry. Below is Rashid El-Habbab's exclusive interview in full.
Jordan’s modern insurance sector arose from the need to provide cover for the flow of trade through the port of Aqaba, which rapidly increased.
The market grew rapidly, supported by the Federation of Jordanian Insurance Companies, which played an important role in increasing technical competence and introducing the principles of good governance to the sector.
The sector is saturated, with 24 insurers and 23 agencies and branches competing for a relatively modest aggregated premium of JD 600 ml.
The insurance industry has been undertaken in Jordan’s financial services sector, which already benefits from stable, well-capitalized and profitable lenders, and rapid growth and diversification in financial services.
Jordan has showcased its ability to remain resilient, maintain internal cohesion, and reinvent itself in the face of adversity. The combination of the global financial crisis of 2009, Arab spring regional turbulence, energy crisis, closure of trade routes resulting in de facto economic siege (Exports to Iraq amounted to 20% of Jordan’s total exports), a decline in remittances, security costs, and increasing food and oil prices has put a significant stain on Jordan’s economic and fiscal drive.
Rashid Jawdat Rashid El-Habbab is General Manager at Arabia Insurance Co.- Jordan.
El-Habbab began his career three decades ago. That makes him a rarity on two fronts: a CEO who started as an entry-level employee but he’s also something else: a G.M. pulling off the remarkable evolution of a company in a relatively staid, stable industry. Along the way, Rashid El-Habbab realized how important it is not only to be accessible but also to motivate employees by making them feel connected to Arabia Insurance. He’s at the wheel of an insurer that’s growing steadily amidst tough competition.
Experience:
Over 35 years of experience in several insurance companies in different markets
Education:
Rashid El-Habbab received his undergraduate degree from American University of Beirut and an Insurance and Risk Management master degree from the Delaware University in USA. He also has a CIP degree from the CII and MIRM from the Institute of Risk Management in UK.
Arabia is pursuing its steady growth and success by witnessing a profitable 2018 and a start to a promising 2019. Arabia's management is putting the right efforts in the right places to foster profitable growth and success.
Arabia's aim for the coming years is to focus on optimizing its operations to meet its clients’ evolving needs, to create value to its shareholders, and to persevere as a significant local player.
Arabia Insurance draws its strength from long years of experience in the Arab and Middle Eastern Insurance Community. It accompanied the progress and development of Jordan, and continues to play a key role.
Arabia Insurance has drawn its objectives by delivering the adequate coverage, proper and prompt claims handling, product development and the latest technical updating. The core of its success lies in understanding individual needs and maintaining a close relationship with customers.
BL: What are the updates on the recent developments at Arabia insurance?
Rashid El-Habbab: Arabia insurance - Jordan has always been a leading company with a good reputation in the Jordanian market and the company is working professionally by offering distinguished insurance services to its clients.
For the recent developments, I have joined the company four years ago and implemented an organizational restructuring process where we have introduced many changes. We managed to recruit professional candidates to enhance our work force and have focused on diversifying our marketing channels with a focus on profitable lines. We have introduced a new technical underwriting and claims management policies and procedures as well and implement a most advanced I.T system that covers all our operations which led to high demand on our products and services.
The reputation of the company is being promoted properly in the market and Arabia Insurance is having a good image among Jordanians.
BL: How far the name 'Arabia Insurance' attracts customers?
Rashid El-Habbab: Arabia Insurance (AICJ) Company is a Jordanian public shareholding company, listed on Amman Stock Exchange since December 2003. Arabia Insurance operates within the insurance sector focusing on multi-line insurance. AICJ is based in Amman, Jordan and was established in March 1975. Our long presence in the market, our good reputation and good insurance services are well known to everyone and enables us to play an active role in serving the needs of the different sectors. In addition, we have strengthened our business relationship with the most prominent reinsurance companies and brokers all over the world. Our shareholders include reputable names in the trade and industry market. Therefore, all of these have played a role to promote our name and added value to our sound image in the market.
BL: What are the plans and strategies for the rest of the year? How optimistic are you regarding the political arena in the Arab region? How far does it impact your business?
Rashid El-Habbab: We are a company working on solid grounds and we have our client-base, budgets and plans. We do a three-year plan. So, we always think ahead and plan for the future.
During the past few years, there were various changes in the political and economic situation in the whole region. Definitely, as a player in the local insurance market, we were affected by those circumstances. However, we managed to keep a steady growth in our markets share, diversify our portfolio, introduce new products and services, and at the same time maintain a good growth of profitability in almost all lines of business.
BL: Motor insurance is incurring losses for most insurance companies, how is it with Arabia Insurance and how is it with the remaining Jordanian insurance companies?
Rashid El-Habbab: We have an agony in the local insurance market because of the motor insurance restricted tariff, especially the compulsory or the liability part of it. Despite this, we are maintaining a marginal profit in our motor results. This is attributed to our strict underwriting policy and the good control on the claims.
As a board member of the Jordan Insurance Federation we are leading endless efforts with all the concerned authorities including the regulatory bodies to reach a fair formula that can enable the insurance companies to stop the drain of losses while providing adequate level of services to the insured public.
We are optimistic about the forthcoming expected shift under the umbrella of a new regulator, namely, the Central Bank of Jordan especially after our recent meetings with the Governor of the Central Bank and his team. We are trying to reach common understandings on problem that are reflecting negatively on the market performance, especially those relates to motor insurance which represents about 40% of the insurance portfolio of the market.
BL: What are the latest news at Jordan Insurance Federation?
Rashid El-Habbab: The board of Jordan Insurance Federation was re-elected 3 months ago and is playing an active role in addressing all the needs of the insurance companies. New technical committees have been formed for each class of business. Also, the Federation is playing a very important role in creating awareness among the public, conducting training to employees, and ensuring health environment between its members.
BL: Isn't it too much to have 24 insurance companies in Jordan?
Rashid El-Habbab: It is definitely a big number of players that exceeds the market needs and I do not think this is a healthy situation. I believe the Jordan Central bank will address this issue and there will be serious measures to study, regulate and implement instructions such as capital adequacy, solvency margins, technical reserves, implementation of international financial standards and market practices related to governance. This will promote mergers and acquisitions. I think twelve insurance companies is more than enough to offer good insurance service to the public and at the same time have a solid financial grounds and strong solvency capabilities.
BL: What about risk management and how do you apply it to Arabia Insurance?
Rashid El-Habbab: Risk management and governance are not an option in the current business world. It has to be implemented according to strict international standards and should be adopted and enforced by all insurance companies starting from the board of directors, the management and all levels at the company. At Arabia Insurance, we are paying a lot of attention to implement risk management standards. And we have recently formed a special dept. to look after this area and recruited an experienced specialist for this mission.
BL: Is Jordan's Central Bank going to impose new regulations regarding mergers and acquisitions?
Rashid El-Habbab: Most probably the answer is yes. Part of the mission of the Central Bank will be to make sure that all insurance companies are abiding by the regulations and working on solid basis and therefore will promote and assist insurance companies that wish to merge and will give them incentive to achieve their goal.
BL: What are the main threats facing the Jordanian insurance companies?
Rashid El-Habbab: We are in a world that is changing rapidly each hour and have to differentiate between threats coming from within such as operational threats and those coming from outside such as political and market threats. The change in technology and information systems, definitely, has its advantages but at the same time it has its disadvantages. All sectors including insurance should be prepared to implement measures and take precautions to deal with those threats by having up-to-date technology that covers systems, hardware, software, e-commerce, and social media. At the same time, we have to be prepared for any threat that is coming out of this implementation including cyber security, hacking, and financial crimes. Another important area is to make sure that it abides by regulatory laws policies which is becoming stricter and contains emphasis on risk management and corporate governance.
BL: In view of the big demand on health products in the market, what are the recent challenged that are facing the insurance companies?
Rashid El-Habbab: There is an increasing demand on medical insurance in the market and the government is encouraging the shift to the private sector to ease the high pressure on the services of the public sector. However, due to continuous increasing cost of medication services on one hand and the high price competition in the insurance market to attract clients, the profit margin is deteriorating year after year. Medical body unions are also pressing to get more benefits to their members and this is imposing an additional burden on the insurers.
BL: What are the present challenges and what are your anticipations for 2020?
Rashid El-Habbab: The insurance sector is part of the economy in a region that is witnessing major political and economic challenges.
As I said, we are optimistic and will always look forward to continue growth and achieve our goals. For 2019, we are witnessing a slowdown in local economy growth, new investments, and ability of people to purchase insurance products, however, we will keep optimistic and take all measures to deal with those challenges to achieve our goals.
BL: What is your opinion on the recent shift in trade relations between Iraq and Jordan? What should insurers do to prepare for tomorrow?
Rashid El-Habbab: Iraq is our big neighbor and historically the economic relationship between the two countries is vital. The Jordanian insurance market has benefited from this but the unstable political situation on the boarders resulted in a sharp drop in trade exchange. We hope this problem will end up soon.
BL: How far is Arabia Insurance active in ecommerce? How businesses must adapt to accommodate the growing trend?
Rashid El-Habbab: Defiantly, e-commerce is an important distribution channel. It is growing fast in the world. Now, with the advancement of online shopping and social media, insurance companies are deploying their resources to accommodate for this new trend and seize this low cost marketing tool to promote their products and services to attract a wider clientele base.
At Arabia, we have adapted to use ecommerce as promotional channels for our products and services and create awareness among people to use those channels through our website, facebook, LinkedIn and other social media pages.
BL: Why life insurance is behind in the Arab countries?
Rashid El-Habbab: Most people are aware about the importance to having life insurance protection. However, Life insurance is very tied to income and to people’s ability to buy those products, especially with the presence of the Social Security Corporation in Jordan and relatively low income of most people. We have developed new life products trying to promote them in the market with an emphasis on micro products to suit the income of most people and have created a dedicated life sales unit to look after it.
BL: Finally, what do you like to add?
Rashid El-Habbab: I would like to thank you for choosing me as a cover guest in such a reputable magazine and wish you the best of success in promoting awareness and conveying a bright message of the development of the insurance sector in the Arab World.
