Having a long experience in a business field is a cherished asset by the shareholders of all financial intuitions. Younis Jamal Al Sayed, CEO of Takaful International Company in both Bahrain and Kuwait, has had a lasting impact on the Takaful industry by pioneering this line of business in Bahrain.
In an exclusive interview with BUSINESS LIFE, Jamal revealed his vision of Takaful, which is a Shariah compliant insurance business. He also spoke about the problems and the possible solutions facing the sector, shedding some lights on the causes of the recent spike in prices and how to deal with its consequences.
BL: How did you start your image and vision in the Kingdom and in the GCC?
Younis Jamal Al Sayed: I started my career in 1982 and that was the first time I joined the insurance industry. I love this subject because I started with aviation insurance and was trained by a Briton who made me like the subject. I spent 20 years of my career working with Arab Insurance Group (ARIG) working in all classes of insurance especially on the intentional insurance side. I am the only one and the first one in the Middle East to become a member of the Aviation Insurance Association in the USA. In 2001, I joined Takaful International and became the Assistant General Manager. Soon thereafter, I worked at Dubai International Financial Centre (DIFC) for two years and it was a completely different experience. I also worked on the regulatory side so I knowledgeable in Takaful and conventional insurance; many people are interested in knowing the difference between those two kinds of insurance at the moment. In 2003, after having spent two years in Dubai, I came back to my country Bahrain and took up the post of General Manager of Takaful International. I drew a business plan and I discussed it with the board, which went on to approve it. Then I started with the restructuring of the company and I tried to change the payroll and designed a package that would attract qualified people. I also focused on training, as it is investment in people that are going to build the future of the company. When I came, Takaful was not even known so I tried to use my experience that I built up during the past 20 years in ARIG and tried to improve the image of the company. Nowadays, Takaful in the Gulf has much more potential than conventional insurance. Everybody is after Takaful so there is a Takaful committee now within Bahrain insurance association. We started operations in 1989 as the first Takaful company in the region. Then the other Takaful companies in Bahrain and the region have learned from our experience. We tried to assist those new companies in building their Islamic structure, free of charge. We also trained their employees who spent some time with us. I suggested to my group to hold an expansion program that will go under three different phases. They approved the suggestion so we went to Dubai International Financial Centre and applied. We got a licence for Group One Takaful. We decided to go into three phases. Phase one is going to cover the GCC and MENA area, phase two to cover South East Asia and the Far East, phase three is going to cover Europe and the entire world. We applied for Kuwait which is where our group is located and where we are going to see most of our captive business coming from.
BL: Why doesn’t Takaful International Company innovate or produce technical software and various other products?
Younis Jamal Al Sayed: We are actually in the process of doing that and the deadline is in six months. We should be able to launch it and sell it to our sister company in Kuwait and we might be able to sell it to the other companies also at the same time because the other companies still need software. We are in the process of testing this in our company and then we would sell it in and out of Bahrain to the Takaful companies. This is good because it could show how to process the Takaful system in a good way. In addition we have our Third Party Administration (TPA) for the medical and we are in the process of selling it outside Bahrain for our sister company in Kuwait and to other companies in the region.
BL: What are your constructive criticisms on the global insurance and reinsurance sector and the IT sector related to your industry?
Younis Jamal Al Sayed: I’d like to see big players in the market where people and companies retain business. Most of them are not risk takers. They just work like brokers. This is not good and we have to build our own retention and build our own underwriting capacity to be able to retain most of the business under our own umbrella. We also have to improve the awareness of Takaful when it comes to the direct Takaful or the re-Takaful. A lot of people do not know how the system works until now. Takaful has not been in the region for more than 20 years and we are still learning.
BL: What are your recommendations for the region to enable it to take such a risk?
Younis Jamal Al Sayed: We’ve got to have big insurance and reinsurance companies but they should work hard to build up their own capacity and retention. Even big companies cannot live on their own as they will still need the capacity of the retrocession market, but gradually, they could retain the business here.
BL: How reliable can Shariah experts be, considering the work load they are subjected to? In Malaysia, for example, Shariah experts are bound by law as not to monitor more than two or three banks?
Younis Jamal Al Sayed:for the time being there are some shortages on the shariah experts. What I suggest that every Islamic bank or insurance company should adopt a policy where they should train new graduates to be a shariah expert in the industry, honestly speaking we should adopt the same system like the Malaysian and I think the Central Bank of Bahrain is looking into this issue as well.
BL: What is the projected growth of the takaful insurance sector in the region and the globe?
Younis Jamal Al Sayed:It is between 20 and 25% in the international market, not only in Bahrain. It varies between Malaysia and this part of the world. Most of the growth is in Islamic investment, in real estate, petroleum industry, telecommunications, which will reflect on the takaful business. More than 54 Takaful companies have been created in this part of the world in recent years. And by 2012 it will maintain the same trend. As the insurance growth in the region tops 20 or 25% and this will also be reflected in the takaful business.
BL: We have seen in the industry worldwide that many growth trends usually reach a peak and then start slowing down or become stable?
Younis Jamal Al Sayed:No, the growth has not reached that peak yet, as the investments and the projects are still pouring in. Sheikh Mohammad bin Reached has not finished with Dubai yet, and he announced that he wanted to start in Ajman and other Emirates, likewise in Qatar. This will continue the same trend, a sustained growth in investments in the real estate and in oil projects, and these investments will in turn boost the insurance business and the Takaful side. But the problem is the small percentage of business retention, as most takaful companies retain only a small share of business on the long run. But there is a big potential in this region as insurance is still not compulsory in many lines of business. Especially if we work on awareness and marketing, we see that there is a lot of room for growth. In the west, where insurance awareness is very high, the insurance industry is so big, that many insurance companies own banks.
BL:Why are many insurance and reinsurance companies seeking licenses in Bahrain?
Younis Jamal Al Sayed:Because Bahrain is the hub of the international market, as the central bank built a regulatory base, for example, it has seven consultation papers for takaful only and a different set for traditional insurance. The country also possesses the infrastructure, from roads, airport, water and electricity. The country can be used as a base of operation, and once you establish your company in Bahrain you can work in Saudi Arabia, Dubai and all the GCC markets. Also Bahrain has a highly competent and experienced work force, especially in insurance. You also have a low cost of living, compared to Dubai for example, where it costs like Dhms. 15,000, while in Bahrain it costs 400 or 500 to live. And this is due to the government inflation control policies.
BL: What are your comments regarding Qatari foreign Minister’s comments that the region’s business people are investing in real estate and he said this is not enough as businessmen should be creating real businesses like creating a new industry or innovating new business projects that will last for many generations?
Younis Jamal Al Sayed:The oil prices have shot up very fast, so there is a lot of cash in the system. I agree with the minister about the fact that a large part of the cash is being invested in real estate. This reflected negatively on building material prices like cement and iron. But to a certain extent this focus on real estate cannot continue as the price of land and materials is reaching new heights. Part of what the minster was saying is right. However, real estate and high-rise buildings are tangible projects, while other investments are less visible. For example, there are three new cement companies, and telecommunication companies. There is a strong growth in many sectors, but it is less visible than real estate growth. In Oman they did it differently; they used the oil income to build factories for aluminium, refineries. Bahrain and Doha wanted a quick return on their capital. On the other hand, Dubai used a different strategy by training their own human resources, and sending them to foreign countries to get experience and then come back to benefit their own countries. But in Qatar they have no local human resources, they have big projects but they rely on expatriates. In Bahrain they are growing gradually, without making big leaps, so they have the necessary infrastructure and manpower. And the country is open, so this helps with the growth.
BL: How do deal with the rising prices and inflation?
Younis Jamal Al Sayed:As the oil prices keep going up this will reflect on inflation. And if the incomes don’t go up the local population will suffer. If the economy is going to open up like Dubai, locals will not be able to live with this income. The government could subsidise some energy costs or other products, but this will not be enough as people have more needs now, so the incomes need to rise in parallel to the rise in costs. Additionally, the problem is compounded by the fact that Bahrain is not an oil producing country. To solve this problem of rising prices, we need to increase the value of the currency. For example, the Kuwaiti dinar has a high value compared to Bahrain’s currency. That is why only increasing salary will not solve the problem, as the prices will rise sharply after any salary increase. Finally I am very happy to see that our efforts are bearing fruits and my team is enthusiastic about its work, and this atmosphere is very good for our performance and team building.
