INSIDE: Analysis6 Viewpoint8 Round table · Equinix.ae Contact us to book your VIP data centre tour of our Dubai IBX Website: ... the IIAL has been the first of the major risk centres

SINGAPOREINTERNATIONALREINSURANCECONGRESS2013

INSIDE: 3 Forward 4 Analysis 6 Viewpoint 8 Round table 12 London13 Chairman’s address 12 Conference round-up

Unitedwe standIIAL Chairman Max Taylor told delegates at the inaugural IIAL conference the industry has to work in tandem if they are to realise the opportunities of Sharia-compliant insurance products

FULL ADDRESSON PAGE 13

‘‘“If we take a collaborative, partnership approach to the development of the market we can and will succeed.”Max Taylor, IIAL

2-6 NOVEMBER 2014 @IIAL 2015theagenda

8 NOVEMBER 2015, DUBAI www.re360.co

IN ASSOCIATION WITH THE

The bigquestionsThe issue features a full report on a roundtable which saw leading members of the market discuss the current potential for the MENA and Islamic markets and how best to turn potential into

opportunity.

l Full story on p8

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WHERE OPPORTUNITY CONNECTS

12 Conference reportIUA CEO tells conference London is ready to play its part.

13 Conference reportIIAL Chairman says partnership key to a long term target

14 Conferenceround upFull roundup on the discussion and debate in Dubai

reinsurance | the agenda @IIAL 2015

CONTENTS | INTRODUCTION 03

Inside Introduction

4

Analysis IIAL executive board member James Bagshawe looks at the success of the association’s inaugural conference.

6 ViewpointRoundtable sponsor Equinix on how technology can aid the transformation of the

emerging MENA markets.

8 Roundtable Senior figures discuss the prospects for the Islamic and MENA markets and what needs to be done to drive growth

When you make a suggestion you always hope it will be appreciated.

When the team behind the Islamic Insurance Association of London (IIAL) suggested its formation I am sure their aim was to open new doors for London.

Innovation has been at the heart of the London insurance market and while the UK Government has been pushing to make London an Islamic Financial Services Centre, London via the IIAL has been the first of the major risk centres to make the move to seriously engage with the Islamic business community and provide Sharia-compliant commercial products.

Therefore when they arrived in Dubai I am sure there was a degree of nervousness as to how the event and the IIAL would be received.

Judging by the reaction they need not have worried as the feedback throughout the event was an appreciation from the local markets that London was looking to work in partnership to build the sector.

While local underwriters and brokers were happy to engage so were the Dubai government as the Emirate looks to become the centre of the global Islamic economy.

The event has created the first solid foundations for the wider market to move forward but as the IIAL executives cautioned it is a great start but the industry has to build on the foundations and maintain the momentum.

Will for Sharia market gathering traction

Jon Guy, Editorial Director, Reinsurance magazinereinsurance April 2013

8

Jon Guy, Editorial Director, Reinsurance magazine

EDITORIAL

The past month has been another whereby the industry has looked to identify its issues and seek solutions.

A constant topic for the past 12 months and beyond has been the debate over the level of capacity contained in the market.

The consensus remains that there is more capacity than demand as the economic squeeze continues and the primary market look to change their buying habits retaining more risk and attaching higher up in an effort to spend their reinsurance premium to protect against extreme events.

A new report says Insured Linked Securities now account for 15% of the market and the attraction of ILS to the capital markets is if anything getting stronger in a low investment yield environment.

Therefore the announcement in Qatar of a new state backed reinsurance company which will also be inviting international underwriters to participate in the new Al Koot venture.

This when the talk in Doha was of excess capacity and that competition was impacting pricing in the region, however the same can be said of almost anywhere other than the most testing of markets that have delivered hefty prior year losses.

Market forces will no doubt prevail but reinsurance looks set to remain a major attraction for investors in the months to come as returns continue to be hard to come by elsewhere.

A capacity to

constantly surprise

EditorialEditorial Director Jon GuyTel + 44 (0)20 3651 5890E-mail [email protected]

Art Editor Rob CrottyTel + 44 (0)7952 319561E-mail [email protected]

Advertisement SalesCommercial DirectorJonathan TrinderTel: +44 (0)20 3651 5889E-mail [email protected]

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theagenda

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reinsurance | the agenda @IIAL 2015 www.re360.co

04 IIAL DUBAI | CONFERENCE

Dubai is keen to establish itself as the centre of the global Islamic economy and via the DIEDC is expending large amounts of time and resources to achieve that aim. We very much hope that going forwards they will look to London for increasing support.’’JAMES BAGSHAWE ‘‘

When the IIAL was formed and officially launched

earlier this year, it completed what was an important missing piece in the jigsaw for London’s aspirations to become the leading Islamic financial centre outside those in Islamic nations.

What we were unaware of at the time was that while London was looking to build a reputation with the global Islamic business community Dubai had embarked on its own strategy to become the centre for the global Islamic economy.

Therefore it was fitting that we should hold our first conference in Dubai, kindly hosted by the Dubai International Financial Centre (DIFC). We have received significant support from both the International Underwriting Association, the Corporation of Lloyd’s and it has been this partnership approach that has enabled us to deliver this event alongside the support of our sponsors.

The aim of the conference, which was clearly highlighted in the theme, was one of co-operation and partnership. The message we wanted to promote was that if we work together and bring our skills to bear we can and will deliver a range of Shariah-compliant insurance and reinsurance products that will establish

Islamic insurance as a viable part of the global insurance industry.

The adage goes “where there is a will there is a way” and if that is the case we are on solid ground. It was so encouraging to hear leading members of the UAE market welcoming the involvement of London, via the IIAL, and clearly appreciating what we can provide to enhance their ability to do business and meet the needs of their clients.

APPETITEThe figures on the growth of the Islamic financial sector clearly show that there is a need and appetite for products that are delivered in a Shariah-

compliant manner.To hear the CEO of the

Dubai Islamic Economy Development Centre (DIEDC), Abdulla Mohammed Al Awar tell the conference that he welcomed greater co-operation between the UK and the UAE and believed that the conference was the first step in an on-going partnership was a significant moment for London and the IIAL.

Dubai is keen to establish itself as the centre of the global Islamic economy and via the DIEDC is expending large amounts of time and resources to achieve that aim. We very much hope that going forwards they will look to London for increasing support,

advice and expertise when it comes to the provision of Islamic insurance products.

While the speeches and the panel sessions set the agenda for what comes next, it is heartening to hear that those members of the London and international markets that were at the event are reporting they are now engaged in some substantive discussions with counterparties in the region to look at initiatives that will turn the obvious opportunities into innovative and attractive products.

At the IIAL we will continue to engage with the DIFC, the DIEDC and the broader Islamic markets to reinforce London’s commitment to building the Islamic insurance sector. l

Islamic insurance Association of London (IIAL) Executive Board Member James Bagshawe discusses the success of the Association’s first conference and the next steps.

opportunityValue and

James Bagshawe: ‘‘The aim of the conference, which was clearly highlighted in the theme, was one of co-operation and partnership.’’

sharing reinsurance opinion

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valued opinion, vital content

For more information contact Jonathan Trinder at Tel+44 (0)20 3651 5889 e-mail [email protected]

‘‘Clients expect the company to which they are transferring their risks to be bigger. We have seen a change in the Lloyd’s market for instance where now the stamp capacity is five times bigger than 15 years ago,”

M&A activity picks up pace as big becomes beautiful for many

www.re360.co III VALUED OPINION, VALUED CONTENT

Feeling the squeeze

Q1 | 2015

M&A activity picks up pace as big becomes beautiful for many

| III Renewals: Rates down as underwriters seek to keep terms tight

III ILS: 2015 set to be record issuance year as investor appetite grows III www.Re360.co: A full round up of what’s been happening on Reinsurance’s new video-led website

Clients expect the company to which they are transferring their risks to be bigger. We have seen a change in the Lloyd’s market for instance where now the stamp capacity is five times bigger than 15 years ago,” Julian James, Allied World

fully covered

RE360-housead-v2NEWforMarch2015.indd 1 05/06/2015 11:14


06 IIAL DUBAI | TECHNOLOGY VIEWPOINT

Insurance – a word that brings to mind a variety of thoughts spanning issues like trust, security,

tradition or protection alongside place names such as London or New York, Munich or Zurich and markets such as Europe, the USA, Japan or Australia. Old, historic – perhaps stable or more rudely backward – are these all areas that might cross someone’s mind when the great industry names such as Lloyd’s or the Swiss or Munich Re are mentioned?

Yet today this market is changing – it needs to become less traditional and more new and it needs to look beyond its familiar boundaries for new markets and new customers – in short it’s looking for growth.

One of the potential areas for growth takes us to the UAE, to Dubai, where recently the newly formed Islamic Insurance Association of London (IIAL) held its inaugural gathering in the offices of the Dubai International Financial Centre

(DIFC) attended by some 100 practitioners from London and the UAE.

We were there to learn how London can provide support to the local market to help that market develop, but of course to bring resulting business back to London. But where does the local market find itself today?

Like many developing markets (from an insurance perspective) UAE is dominated by the purchase of personal insurance such as life and health, two areas of the market that are currently perceived of being of greater value than other non-compulsory insurance products such as household. This is partly because of the more family-based approach to life to be found in the East – personal coverages such as life benefit the family unit rather than an individual, partly because of religious reasons – the growing influence of Takaful (Sharia-based) insurance bears witness to that, and partly because until relatively recently in certain Eastern economies your life and health have been

The insurance sector is looking to new markets for growth and James Maudslay of Equinix says technology will have a major role to play in enabling the success in those new territories.

the only “possessions” worth insuring. This all adds up to an environment where the western tradition of insurance purchase is yet to be matched in developing economies.

Yet times are changing, and although recent years have seen a decline in the level of increase in demand, many territories are today experiencing market growth that insurers in the developed markets can only dream of!

As part of our participation at the recent IIAL conference, Equinix held a roundtable with a dozen or so guests to discuss the region, the penetration of insurance into it, and how the use of technology could be used to help in growing the insurance business in UAE and beyond. Amongst other things, we considered three main technological areas:

• Whether insurers can benefit from the use of Cloud Technology

• How interconnection can bring together an emerging digital insurance market

• The way in which

technology can help to drive the digital strategy for Global Insurance companies working across the Dubai and MENA

THE USE OF CLOUD TECHNOLOGYAs with insurers elsewhere, cloud still represents a challenge. Issues such as security, privacy and regulation come to mind in UAE as anywhere else and tax insurers in the same fashion. But a look at the demographics of the local market reveals many similar characteristics to those in Europe or the USA, but with one main difference. In general, the Muslim population has the greatest proportion of young people of any substantial religious group in the world – this means more smart phones, more tablets, greater desire for interesting and exciting products, poor tolerance of bad service and increasing demand for omni-channel service delivery.

In other words a target audience of people who want the always-on levels of service that the cloud might have been designed to deliver.

Cloud can respond to the needs that insurers facing this market are realising they now have. Cloud can:

• Provide flexible resource for delivering performance during demand spikes

• Capital investment is much reduced, especially in the initial stages

• Deliver platforms for the testing of innovative solutions and products

• Use “Edge” technology to process requests and store data close to the end-user so as to improve performance

• Use a hybrid infrastructure model to allow for a range of options to suit the preferences of any particular insurer for data storage and processing, ranging from on site to fully in the cloud

Expandinghorizons

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www.re360.co reinsurance | the agenda @IIAL 2015

0507IIAL DUBAI | TECHNOLOGY VIEWPOINT

The final point, over the use of hybrid computing is significant as it allows insurers to start down the road to cloud whilst only committing to what they feel comfortable with. In other words, it allows development flexibility for the future.

INTERCONNECTION AND EMERGING DIGITAL DATA EXCHANGEInsurers have long formed markets together, some substantial and formal such as the London Market, but with numerous others worldwide where the simple proximity of insurers to each other forms a more informal collective.

What is becoming increasingly obvious though is that the use of electronic data in and amongst insurers is on the increase, and indeed needs to develop far further if service standards are to be raised to the levels required by today’s buyers. Furthermore, the ever-upward rise in the use of big data will bring levels of information currently unheard of in insurance circles into continuous use. And that’s before we add in the use of Telematics in motor, wearables in life and health and the internet of things in all other physical insurances including those in the commercial arena such as cargo.

To handle all this data, insurers and brokers will have to interconnect between themselves and the clients, to allow for the electronic exchange if data. Further

connections will be required to other data sources and to mobile service providers, and in all of this, MENA will be no exception, and indeed with its lower age profile, may even be especially susceptible to the demands of this market.

That in turn implies the need for infrastructure that is based on an interconnection oriented architecture – one that is designed to facilitate a company’s ability to pass data – structured as well as unstructured between one another.

A DIGITAL STRATEGY FOR GLOBAL INSURERSGlobal insurers, in common with other such enterprises, face various technology issues when setting up international offices. These include establishing IT services, handling data protection, data sovereignty and other regulatory considerations, local and home base reporting, and service and support for the local offices.

In the past, this would have presented some serious challenges – expensive local services, complicated data transfer protocols, or inefficient long-distance service delivery, but all of these can now be resolved by a properly designed and executed infrastructure strategy.

Equinix can assist by presenting a global network of data centres to insurers that will allow them to link hubs at or near the corporate headquarters to similar hubs in the territories they are expanding into. This will

achieve several things:• It will allow local services

to be housed close to their place of need which will ensure local performance, but also mean territorial regulations can be complied with

• Long-lining of services can therefore be made redundant

• Data can be efficiently copied to the home office for management information and regulatory reporting purposes

• Unnecessary costs can be reduced as only necessary services are housed locally

• Performance can be maintained or even enhanced through the distribution of data and services to the “Edge”

• Companies can take maximum of local cloud services

Through the use of cloud services, by interconnecting to other stakeholders in the insurance value chain, and by having an effective digital deliver strategy, insurers, local and global alike, can take advantage of the potential of this growing, yet largely underserved market. They can make sure that their technology is delivered to their clients and target markets in a way that matches the need to improved customer service.

They can make sure that local regulation, which is hardly going to reduce in terms of its effects on the conduct of insurance business, can be complied with and that internal reporting and analysis needs can be met, and all of this can be done in a

way that maintains flexibility for the future, whilst reducing the cost of innovation, either in terms of products sold, or territories traded in.

A CALL TO ACTIONThis paper has already suggested that insurers operating in MENA have the opportunity to develop their businesses through the use of technology. A multitude of areas exist for insurers to focus on, but top strategic business / IT plans, recently confirmed by Equinix’s Enterprise of the Future survey of 1,000 global CIO’s, must include:

• Driving revenue growth• By developing IT

infrastructure to enable revenue growth, by supporting new product offerings • Improve cyber security

• Perhaps the single most important factor in enterprise IT today, yet only a minority of participants (30%) felt that they were adequately protected today• Deploy hybrid cloud

• Companies will require access to multiple cloud services, across multiple locations over the next five years• Drive value and intelligence from big data

• The embedding or distributing of intelligence (analytics, data, content) across business processes, regions or office locations to gain greater customer insights and make faster, more accurate business decisions

Action to address these areas, combined with use of the principals suggested, above will mean that insurers can indeed use technology to develop their business, and take advantage of the opportunities that await them in MENA. l

What is becoming increasingly obvious though is that the use of electronic data in and amongst insurers is on the increase, and indeed needs to develop far further if service standards are to be raised to the levels required by today’s buyers.’’

JAMES MAUDSLEY, EQUINIX ‘‘


08 IIAL DUBAI | ROUND TABLE

Opportunity Knocks Senior figures from the MENA and international re/insurance markets gathered in Dubai to discuss how the industry can turn the region’s opportunities into reality Jon Guy reports.

Q: Much has been said around the opportunities

for the re/insurance sector in the MENA region, what is the panel’s view as to where these opportunities lie?

PG: I if you look at the region and you look at what is happening in Qatar the possibilities are endless. In terms of Qatar’s 2030 vision it makes the Fifa World Cup look like a sideshow. There are massive growth opportunities and inherently that must mean there are opportunities for the market both conventionally and sharia.

RB: There is a substantial mismatch between the opportunities for the reinsurance re/takaful market and the direct insurance takaful market and they are slightly disconnected mainly due to the lack of skills in the retail markets to deliver on perhaps the more complex of the larger risk exposures. Certainly from our position in London we have the capability of delivering in either format and the ability of the region to absorb more capacity highlights the fact there will be opportunities. Whether it comes from the conventional carriers or the takaful carriers the risk appears to be there.

MJ: I think the growth will

be in personal lines for the next five years. I think the commercial sector is pretty much covered but when you look at Saudi Arabia and the UAE you have huge population growth which will see a greater demand in the future.

DM: I see Dubai as a hub

which is slightly less mature then Singapore and when you look at the opportunities there were when Singapore was at this stage in its development they were significant. I guess it is a question as to whether we see some growth in the local markets but there is an involvement from the

IN ASSOCIATION WITH

‘‘The panelDave Matcham CEO IUA (DM)

Peter Greengrass

MD NDI Brokers (PG)

Richard Bishop

CEO Cobalt Underwriting (RB)

Rainer Lehner

SEO Asia Capital Reinsurance (RL)

Michael Jensen MD MENA AIG (MJ)

James Bagshawe

Executive board member IIAL (JB)

Jihad Faitrouni

CEO Aman Insurance (JF)

James Maudslay

Head of Insurance Equinix (JM)


05IIAL DUBAI | ROUND TABLE 09

other centres for those large risks that need to be shared around the world. Your point is there is less growth in the commercial space.

MJ: Yes there are some projects that are coming on line with a lot of talk about the 2022 World Cup but the premiums in the wider market are quite small so they are not making that much difference.

JM: You mentioned you see the growth in personal line insurance and in London for instance insurers are having to deliver ever more complex products to their clients via

their mobiles and apps do you see that happening here?

MJ: Yes I think the UAE in particular is extremely connected and there are those who want to transact business this way.

PG: I think what we see is that there is at the executive level within the insurers which says “this is our vision” but it does not get translated down into the company itself, there is nobody there to take this forward and make this work.

MJ: You have a terribly competitive market here and when you look at motor

insurance the questions asked are such as “what is the size of the engine, and maybe to some degree “what is your nationality”, they are the two defining factors.

RL: If that can give you a quote to market then I am not sure, we are all running on very thin margins at present and I am not sure that we are yet ready to embrace technology asking those type of questions that you automatically use as parameters for deciding a price. For me there is only so much the commercial market can do. Yes we can build a couple of new stadiums in Qatar but the

premiums in that are a few million dollars. You do not have much of a population in the UAE countries you do have a population in Saudi and in the North African countries that is where I see the opportunity. I see the challenge that the regulators are increasing the demands on capital to be put into these operations.

DM: That is becoming a common theme with all the regulators, where local capital requirements are being driven by the regulator to protect the market locally. It is worrying. We spoke earlier about how

‘‘

‘‘

if you look at the region and you look at what is happening in Qatar the possibilities are endless. In terms of Qatar’s 2030 vision it makes the Fifa world cup look like a side-show.’’PETER GREENGRASS, NDI BROKERS

I see Dubai as a hub which is slightly less mature then Singapore and when you look at the opportunities there were when Singapore was at this stage in its development they were significant.’’DAVE MATCHAM, IUA


10 IIAL DUBAI | ROUND TABLE

London is keen to play a role in the development of these emerging markets but you cannot even penetrate them. I think over regulation could be a problem.

RB: The other issue is not having a legal framework across the GCC. So it means you have to put in separate structures in each territory and that can take time.

MJ: The other issue is time, certainly for US companies and I am sure European companies our time horizon is measured by a quarter or even a year or two years, but just look at the time horizon for Dubai. That is a 25 year plan or vision 2030 is Qatar for instance. If you go further

east in to China it is even that much longer. There is a rush to get a return from the established international players and that rush might even be greater than that of the regional players who know the value of the relationships.

JB: This backs up what we have been hearing throughout the day. The issue remains that the commercial penetration rates are quite high but personal lines and life penetration rates were quite low. But it is a situation which is proving hard to breakdown for a number of reasons such as educating the population to understand the benefit that insurance and protection products can bring.

JF: I think when we talk about why penetration is greater for some classes than others we have to look at the source of this business.

There is no state funding for a pension here so they have to find an alternative, but companies are keen to have life insurance for their employees in case of any accidents. Most of the ex-pat community are professionals so they will be aware of the need for life insurance for instance.

The biggest influences in the GCC countries are not the companies but the government. They have the ability to push the market and may well look to a private

public partnership approach. There is a big increase

in medical and health but that is being driven by the regulations from the GCC governments that it has to be taken out.

We need to work with the governments to push the benefits of the insurance and convince the population that they need cover.

MJ: I do not agree, what you are suggesting, that mandatory insurance should be put in place. Other than third party liability on automobile, maybe some aviation and some nuclear power plants. I agree it can bring a spike but in the long term you get tariffs and then

‘‘‘‘

‘‘ ‘‘As markets move from under developed to developed there are different phases to buying products. You start at the beginning with the government providing he infrastructure which is where I suppose Dubai has been very successful in the past 20 years.’’RICHARD BISHOP, COBALT UNDERWRITING

I think the growth will be in personal lines for the next five years. I think the commercial sector is pretty much covered but when you look at Saudi Arabia and the UAE you have huge population growth which will see a greater demand in the future.’’MICHAEL JENSEN, AIG

For me there is only so much the commercial market can do. Yes we can build a couple of new stadiums in Qatar but the premiums in that are a few million dollars.’’RAINER LEHNER, CAPITAL REINSURANCE

05IIAL DUBAI | ROUND TABLE 11


we just become a tax, and you stop bringing new products to the market or offering competitive solutions to clients.

DM: It is the model of a mature market when you can reduce the level of mandatory covers.

JF: We have to convince people of the value of what we provide. This may be via the media or by education. We have to push the market otherwise we cannot change the market unless we push the market.

PG: It goes back to the point that people are not buying the product because they do not see the need for the product. As we see a

growing middle class I think that penetration is going to come as it will bring with it more ownership of assets, and having a surplus which means you can do more than survive.

RB: As markets move from under developed to developed there are different phases to buying products. You start at the beginning with the government providing the infrastructure which is where I suppose Dubai has been very successful in the past 20 years, and with it has come an aspiration of the population to acquire wealth and what they haven’t been educated to do is appreciate

they need to protect that wealth. It is the natural progression of a market but it takes years.

JF: We have to create and deliver innovation in order to push the market. To sell the product you have to identify the need for the product and communicate that need to the customers.

JB: You make a very good point it is about what the clients want and need and risk management is a significant part of that conversation and then dealing with a claim when it arises. The government can be a catalyst but ultimately it is about the industry and the clients working to provide

the right products. It is a case of demand and supply.

RB: There is a dimension in these markets which you do not see elsewhere and that is the religious aspect. The population you also have to educate the need for insurance and that it is not against their religious beliefs and there is a lot of misunderstanding by a lot of the population that it is OK to buy insurance. It is an opportunity for the Takaful industry because they do not have to get over the a question as to whether their product is Sharia compliant. The government has a role to play in answering that question. l

‘‘ ‘‘

‘‘

It is about what the clients want and need and risk management is a significant part of that conversation and then dealing with a claims when it arises.’’ JAMES BAGSHAWE, IIAL

In London for instance insurers are having to deliver ever more complex products to their clients via their mobiles and apps do you see that happening here?’’ JAMES MAUDSLAY, EQUINIX

The biggest influences in the GCC countries are not the companies but the government. They have the ability to push the market and may well look to a private public partnership approach.’’JIHAD FAITROUNI, AMAN INSURANCE


12 IIAL DUBAI | IUA VIEW

‘‘For insurance, the UK is the largest market in Europe, the 3rd largest in the world. The London market alone is responsible for up to £60 billion of GWP and for marine for example, it accounts for 26% of global market share.’’DAVE MATCHAM, IUA ‘‘

For Dave Matcham his brief was to explain to the wider Islamic insurance sector

just why London matters if the sector is to gain a level of traction which creates a viable and attractive alternative to conventional products.

In some ways the London market is as much in need of ensuring the delivery of Sharia-compliant coverage as the Islamic business community is in need of the ability to make a choice between Sharia and conventional products.

Mr Matcham told delegates: “London is a remarkable city, it has a long trading history, huge international presence, amazing talent and diversity and has been able to adapt to changing global economic environments to grow and remain relevant. London does indeed matter as evidenced and titled in a comprehensive report published by the London insurance market last year.”

“There are many ways to experience London to understand its capabilities. Its financial statistics are astonishing,” he added. “According to CityUK, which represents all financial services in the City, the UK, with London at its epicentre, is the leading exporter of financial services across the world with a trade surplus of $95 billion, more than double the next largest ie. USA. There are 250 foreign banks in

London; more than any other centre and the UK accounts for 17% of international bank lending – again higher than any other centre.

“UK assets under management totalled £6.2 trillion in 2013 – the 2nd largest in the world. The UK is also the leading European centre for management of hedge funds, sovereign wealth funds and private equity funds.

“For insurance, UK is the largest market in Europe, the 3rd largest in the world. The London market alone is responsible for up to £60 billion of GWP and for marine for example, it accounts for 26% of global market share, including close to 60% share of energy business worldwide.”

However, Mr Matcham

said while the statistics were impressive there was a growing maturity in London as an Islamic financial centre, with banking, legal and stock exchange facilities specifically directed at the Islamic business sector.

“However, until recently, the missing piece of the jigsaw has been the supply of sharia compliant commercial insurance products,” he added. “The puzzle is now complete, these types of risks are now being written, and we are now looking to build on this, in yet another example of how the London market evolves and innovates its product offering.”

Mr Matcham said the recent London matters report had highlighted the

need for London to look to the opportunities in the emerging markets. “The London market is very strong in its traditional markets of UK, Europe and the USA,” he explained. “Conversely London needs to do more to grow its share of business in emerging markets. Just 2.5% of the book has this classification. Mr Matcham added: “The growth of commercial sharia compliant products in London is another example of innovation. The formation of IIAL, something very typical of London’s internal co-operation, will facilitate this trade, promote standards and ensure transparency is paramount.’’ l

International Underwriting Association (IUA) Chief Executive Dave Matcham told the IIAL Conference London can play its full part in the delivery of commercial Islamic insurance.Jon Guy reports.

Islamic growthLondon keen to driveDave Matcham: ‘‘London needs to do more to grow its share of business in emerging markets.’’

Partnership the key to success05IIAL DUBAI | MAX TAYLOR 13

IIAL Chairman Max Taylor spelt out the aims of his association and the need for a long term

approach in the building of a sustainable sharia-compliant sector.

He challenged the perception that there needed to be a clear differentiation in the eyes of the brokers and he clients between Sharia and conventional products.

He said the theme for the conference was IIAL & UAE: Working in Partnership to Develop Islamic Insurance, “and partnership is a word that runs not only through the event but also the core and fundamental aims of the IIAL”.

“If you look at panel sessions that are at the heart of today’s agenda it is clear that there needs to be a partnership approach both in the way we as an industry engage with each other to drive the growth of Islamic insurance and how we as an industry engage with our clients to highlight the availability of Islamic insurance products and their benefits,” he added.

On the IIAL Mr Taylor told delegates: “We have long believed that to enhance the

market and deliver change in the Islamic insurance sector there is a real need for greater expertise and knowledge and this is where the London market can play a leading role.”

He said the thought that London was looking to simply drive the process alone was wide of the mark.

“There needs to be collaboration rather than competition if we are to succeed,” he said. “London’s tried and tested legal environment makes product development very straightforward, which has to be utilised. London also enjoys a non-discriminatory regulatory environment. It provides a level playing field that recognises the core values at the heart of the

Islamic insurance proposition.“If we take a collaborative,

partnership approach to the development of the market we can and will succeed.”

In terms of the IIAL he said its message was simple, it is serious about the development of the Islamic insurance industry.

“We want our partners to use the experience and expertise in London to help deliver the products your clients’ require in the way they want those products to be delivered.

“We believe the aims of the association and our international partners and markets are the same.”

Mr Taylor added: “We need to move away from the mind-set that Sharia and Islamic compliant coverage is somehow

a different entity entirely to the conventional risk products. The Islamic sector is just that. It is a sector of the market as a whole and it is not a different market.

“Be it Takaful, Sharia compliant or conventional we are all seeking to deliver products that protect and mitigate against the consequences of risk and loss.

“It is a different model but it does not need to be redefined; it needs to be recognised as an integral part of the global insurance industry.”

Mr Taylor continued: “We should not look to highlight differences. Instead we should highlight the solutions and in terms of the Sharia compliant and Takaful market the ethically responsible nature of the provider’s financial structure.”

There is also challenges. “As a sector we need to concentrate on educating our client base across the world on the benefits that insurance can bring and explain how those benefits can be delivered to suit the financial, risk, and cultural needs of that client base,” he added.

Mr Taylor said: “The IIAL and its members are under no misconception that there are any quick wins. To build a market, to establish a reputation, and to develop mutually beneficial relationships takes time.

“It is a journey and one that cannot be taken in isolation. It is a road that we need to travel together for the benefit of our clients and the industry.” l

In his address to the conference IIAL Chairman Max Taylor told delegates that there needs to be a partnership approach if the establishment of a significant sharia-compliant commercial insurance and reinsurance mar-ket is to me achieved. Jon Guy reports.

We need to move away from the mind-set that Sharia and Islamic compliant coverage is somehow a different entity entirely to the conventional risk products. The Islamic sector is just that. It is a sector of the market as a whole.’’MAX TAYLOR, IIAL ‘‘

Max Taylor: ‘‘As a sector we need to concentrate on educating our client base across the world on the benefits that insurance can bring.’’



14 IIAL DUBA | CONFERENCE ROUND-UP

Given the theme it is little surprise that the main thrust of the conference

was one of seeking ways in which London can work with those in the Islamic markets to create viable Islamic insurance alternatives.

“IIAL & UAE: working in partnership to develop Islamic Insurance” was apt given Dubai’s stated objective to become the global Islamic

A meeting of minds The Islamic Insurance Association of London headed for Dubai for a conference attended by delegates from across the Islamic world. The speakers and panels provided plenty to debate and the potential for a path to delivering growth in the creation of the Islamic insurance sector. Jon Guy reports.

economy. As such it is seeking to position itself at the fulcrum from which Islamic financial services, and assets flow.

Whether the IIAL were aware of Dubai’s aspirations during the planning stage is unclear but the man tasked with delivering the economic pre-eminence was clear that to do so insurance would play a part.

Abdulla Mohammed Al Awar CEO of the Dubai Islamic Economy Development Centre

told delegates that the IIAL once again built on traditions of collaboration between the UK and the Emirate.

“The conference will set a mark in the long standing relationship between the UAE and London,” he said. “This is an ongoing positive relationship where international opportunities can be identified and also our partnership will continue to build.

Mr Al Award reaffirmed

the fact that the strategy for Dubai is to become the centre for the Islamic economy.

“Part of that will be achieved through collaboration with other centres and we will be better able to establish ourselves as the centre for the Islamic economy,” he added. “Co-operation brings out the best of us and we will see it going forwards. The Islamic Insurance sector is a key component of our strategy, and we would like to develop this vital sector.

“However, Takaful at present represents less than 1% of Islamic financial services worldwide, and this has to be viewed as an opportunity for growth.

But there are still crucial issues and challenges. The industry has a need to develop and I hope this event will see some of these challenges


15IIAL DUBAI | CONFERENCE ROUND-UP

discussed here today. “Our conference today

will create ideas for Takaful operators to move into areas outside of their comfort zone. Areas such as micro-takaful for those on low incomes and a greater use of Retakaful.

“It is our duty to ensure that the world is more secure for future generations. It is also our duty to ensure the current gaps are filled.”

Delegates were welcomed by the CEO of the DIFC Authority Arif Amiri who said the financial centre was gearing up to increase the number of underwriters it housed and he hoped that the Islamic insurance sector would provide a number of those new tenants.

The panel sessions were geared to addressing some of the core issues with risk management a key component. Speakers said the

potential for the market was clearly evident but that the biggest barrier at present was the need for the availability of commercial sharia-compliant insurance and reinsurance products to be better communicated to the Islamic and wider business community.

As was pointed out while the sharia-compliant products adhere to the rules that make them acceptable to the Islamic firms these products could and should be marketed to non-Muslim businesses given the requirement for

such products to deliver transparency, fairness and the need for the policyholders to share in the outcome.

The underwriting panel saw Lloyd’s Director of International Markets Vincent Vandendael highlight how the Lloyd’s market has been built on the foundations of mutuality and shared risk and that it was fully committed to working with local markets to drive the provision of Sharia-compliant capacity.

The issues around asset management for Islamic premiums were also discussed

given the tight rules on the permissible investment vehicles.

The consensus was that while the current global investment environment remained challenging there were a wide range of opportunities. However, there was view that the Islamic financial services industry could assist with the creation of greater numbers of Sukuk opportunities.

The event closed with a plea from conference moderator Professor Iqbal Asaria who said that for the successful establishment of an Islamic insurance sector everyone had to play their full part. He added that if there were those who felt that such was the momentum if they failed to contribute it would go unnoticed were mistaken.

“You all have a role to play,” he said.” l

‘‘Delegates were welcomed by the CEO of the DIFC Authority Arif Amiri who said the financial centre was gearing up to increase the number of underwriters it housed and he hoped that the Islamic insurance sector would provide a number of those new tenants.

Among the speakers at the IIAL were: Left; Abdulla Mohammed Al Awar CEO of the DIEDC. Above right; Lloyd’s Director of International markets Vincent Vandendael and right; the CEO of the DIFC Authority Arif Amiri.

Abdulla Mohammed Al Awar, Duba Islamic Economy,Development centre

Arif Amiri, CEO, FIFc Authority

What is the IIAL

The IIAL has been formed to create a truly representative body to support the work of those in the UK re/insurance markets that are transacting Islamic fi nance.

Insurance and Reinsurance has been the last of the fi nancial services sectors in London to establish Sharaih compliant operations and products and as such it needs an association to provide a strong and authoritative voice with both UK and international governments and regulators.

With the Islamic nations of Asia and MENA now amongst the world’s biggest economic success stories there is a real need for the provision of transparent and trusted Shariah compliant commercial insurance and risk products. A respected international body such as IIAL is needed to ensure that the insurance industry plays a full role in the development of the Islamic Finance industry and its future regulation. It will also look to promote its membership and the expertise they can bring to their existing and potential clients across the world.

It will provide its membership with a platform to meet, network and have their say on how they wish to shape London as a world leading provider of Islamic insurance and risk solutions.

It will provide analysis on the development of the wider Islamic fi nancial market and how insurance will and can play a part in that development.

It will drive and develop standards for the transaction of Islamic and Shariah compliant commercial re/insurance business, creating a set of standards that can be used as a basis for a future international standard for shariah insurance products and their transactions.

IIAL will build on London’s reputation as a respected and trusted centre in which to conduct Shariah compliant business, doing so through transparency and fairness.

For Further information on membership, please visit our website.

www.iial.co.uk

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