Arabian Insurance Review has spoken to international insurers and brokers to find out the most common misconceptions about the Middle East market, particularly the Arabian Gulf.
We discovered that these misconceptions or ‘myths’ are held not only by international insurance professionals, but sometimes by professionals within the Middle East itself.
The misconceptions are by no means a comprehensive list, however, just these five most commonly-held misconceptions raise important questions.
For example, is sufficient effort being made to produce a new generation of Arab insurance leaders? Are the free zones doing enough to market their individual benefits and unique selling points to the international markets?
The myth: A new wave of Middle East mergers and acquisitions is just around the corner, due to economic circumstances.
Really? Then where are they?
Whenever a market opens up or experiences a phase of new regulation, predictions of mergers follow closely behind. Foreign competition has also been named a trigger for mergers in one or more of the GCC markets in particular.
The truth is that the region as a whole is far more averse to mergers and acquisitions than any other for two main factors.
First, the potential for new business is abundant due to insurance growth rates which remain in double digits for the last 10 years and into 2009.
Second, insurance companies are often not standalone entities, like in Europe or North America, and are often closely affiliated with large diversified business groups which buffer their financial shocks and provide business.
Even the global downturn looks unlikely to spark a wave of mergers, as Ali Barkawi, technical manager at Ascana in Dubai explains: â€œIn the Middle East and
especially the Gulf they do not like mergers generally. Mainly because companies do not need mergers.â€
The only significant merger activity talk in 2009 has come from Saudi Arabia where regulator Sama has given companies the option to merge in order to meet capital and licensing requirements.