AIG forays into Oman
Global insurance leader AIG recently launched its new general insurance operation in Oman. Charles Bouloux, President AIG MEMSA discusses AIG Oman’s ambitious plans with OER

What kind of insurance products are you offering in the ME region?
We offer home, travel and motor insurance solutions to individuals and small business owners. AIG Oman is a branch of AIG MEMSA. We will provide insurance solutions for direct as well as reinsurance clients. Insurance Company Ltd, which was launched in September 2006 as the regional headquarters for the MEMSA region, is located in the Dubai International Financial Centre (DIFC). We have brought AIG’s industry leadership in disciplined underwriting standards to corporations and consumers across the Middle East, Mediterranean and South Asia.

We recognise the Middle East as developing into one of the world’s most important centres of financial activity. Having been in this region for over 50 years, we are excited at the opportunity to contribute to the ongoing growth of the region. As a well-established player in the Middle East, we are attuned to the specific needs of each market by constantly evaluating them in order to develop new products and services to meet these unique needs. Insurance has always been important for the economic growth of any country as it plays a vital part in managing the associated risks. AIG MEMSA benefits from 87 years of experience in delivering innovative insurance solutions through a network that currently spans more than 130 countries, reaching 65 million customers.

How would you assess the Oman insurance scenario?
AIG companies are present in almost every major Arabian market and this experience has provided us an edge over various other companies as AIG can come up with tailor-made insurance solutions based on its experience in similar markets. The Omani insurance market is growing at the rate of 18-20 per cent and AIG naturally is keen to be a player in this market. The Omani staff share the vision of AIG and of His Majesty in diversifying the economy, globalising it and contributing to the skills of Omani workers.

In Oman, people are not worried too much other than motor insurance. About the consumer, awareness of their children or their clients is low. I would like to see that raised remarkably. After Cyclone Gonu, people realised that there is huge risk involved in day-to-day life. Their assets are no longer small assets. So there is a change in the people’s attitude. Certainly, there are perceptible changes happening in Oman and we are encouraged to be a part of that change.

What are the special products for your Omani patrons?
We offer insurance products for specific areas like home auto and travel. We are also introducing a product called disaster cash, where in the event of an unforeseen event, cash can be provided to tide over the crisis. We have been offering products to the corporate world, but we will now have products for individuals in Oman. The products would be distributed through agents, banks, brokers, wherever there is a contact point. In many countries we even use supermarkets to sell our products. AIG is a global organisation and recognises that capacity building is essential for service delivery. Wherever training is necessary it would be provided to the agents. Upgrading skills of the local people is one of the things we wanted to do.

We already are very much actively involved in providing commercial insurances, which are like marine insurance, fire insurance, energy and infrastructure insurance. We are planning to bring consumer related insurances now, which are automobile insurance, home insurance, travel insurance, small business packages etc.

Even during the cyclone disaster we paid some very heavy sums in terms of claims. If you are talking about commercial insurances almost all lines of commercial insurances have this kind of clause, which is the flood clause. We provide insurance for that. Coming to the micro level, like for instance the automobile insurance or home insurance, there also flood is covered and we compensate for that as well.

What is your perception of the Middle East economy?
The Middle East has had a transition to another phase in its economic development. There has been social development as well. As a result, opportunities are greatly enhanced. The way business is developing and small businessmen are trying to start small businesses and develop them into big ones only proves that there are big opportunities. We need to educate them about risk management and try to get them covered by insurance. The tropical cyclone Gonu is a big example where many people lost their cars. Had they insured in time, chances were great that they would have got the money back for their damaged vehicles.

AIG is a late entrant in the Oman market. Having been in the Middle East for five decades, what made you enter now?
We have had some links through our underwriting business. As you know, we are the big underwriters in the world. We wrote big businesses here through international market places. Some of the commercial businesses we wrote from Saudi Arabia. Social development is going on in this market place and it encourages us to come to the next stage.

Do you think this is the right time to penetrate markets like Oman?
Yes. People generally are changing from what they were doing and the way they were working. They are moving on to the next stage on their own, families, businesses, etc. So, we want to be with them doing that.

How big is the Qurum AIG Oman branch?
To start with, we have around 12 employees. We have 90 odd employees working in Dubai and that is our back office. All the technical expertise is available over there like the way we call underwriters, claim experts, actuaries etc., they are all based out of Dubai. Right now we are operating from Muscat. Gradually we will make our presence felt in other parts of the Sultanate.

Can you talk about your financial projection and drivers of the growth?
The insurance industry overall believes that the growth will continue at around 18-20 per cent, which is a good growth. Since the economy is also growing, we are very positive about the sustainability of the growth. Our growth in the Middle East is about 45 per cent. We are projecting around 35 per cent growth in Oman. It is important to state here that we have been in Oman as commercial underwriters. Now we have plans and strategies to go into the consumer line offering unique products, say in travel insurance and we also have plans to service individuals. We will utilise our large capacity for the big risks.

What is your cross-border overview of key players as the competition is stiff?
Basically insurance is a sector where pretty much boundaries don’t matter that much because there is a very important part which is called the capacity or the reinsurance. So, lot of the local players also rely on the major players for reinsurance. We have been present in the Middle East for few years. However we have been involved heavily in insuring risks for many years because we were providing insurance capacity to other players who are over here.

Is there any JV involved?
No. It is a 100 per cent AIG entity.

Talking about reinsurance, more and more insurance companies who are operating in Oman are relying on reinsurance, especially after the cyclone. What is your view?
We have a separate cell and loads of funds for compensation. So, I don’t think we will rely on reinsurance. We are large underwriters, which means, in reality that we retain much of the risks we write. So, we have less reliance to reinsurance compared to other companies. That is why when we provide cover it is mostly with our protection.

– Jayashankar Menon