The MultaQa conference showed that Qatar’s small market size belies the scale of its resilience and ambition, reports David Banks. Whether it is the world-class insurance trading platform or the global intentions of its reinsurers, this Arabian Gulf state cannot be ignored
Signs of Qatar’s economic prowess were clear to anyone attending the MultaQa insurance gathering in the Arabian Gulf nation’s capital city of Doha in March.
Stroll outside the conference centre of the Sharq Village and Spa and you are greeted with a view from the waterfront of a strip of skyscrapers towering along the width of the neighbouring Doha Bay. Many more buildings are under construction further along the coast, while elsewhere there are infrastructure projects with spending in excess of $100bn.
It all points to the fact that Qatar has not only proved its resilience in the financial crisis, but that its ambitions actually remain squarely on course.
Indeed, managers at the Qatar Financial Centre (QFC), which hosted MultaQa, believe the country has reaped economic benefits from uncertainty in major world markets and will be well-placed to exploit economic recovery.
But despite all the optimism, there’s no escaping the fact that the insurance markets in Qatar and the wider Gulf remain small. Indeed, the entire Arabian Gulf is barely breaking through the $20bn mark for gross written premium – comparable in size to Belgium’s insurance market.
Yet the notable feature of the MultaQa gathering was the breadth of initiatives, which give Qatar credibility far beyond the size of domestic premium or domestic insurance capital. The sheer diversity of subjects discussed and differing agendas of companies and markets throughout the Gulf mean that the event deserves close analysis.
Kicking things off
An early note of promise came when speakers mentioned Qatar’s wealth of capital and the increasing willingness of equity providers to diversify investments and engage with the insurance and reinsurance community.
QFC executives also took the chance to explain the strategic shift they had taken to place insurance and reinsurance centre stage. QFC, they say, now focuses on three key pillars: reinsurance, captives and asset management.
This announcement further underlined the fact that MultaQa is not only a conference for insurance discussions but a showcase for the political will and power that drives Qatar’s insurance and finance projects.
Indeed, there was no mistaking the determined wording used by minister of economy and finance, and chairman of the QFC Authority, Yousef Kamal, when announcing the change. “The steps we are taking today reflect our strongly held belief that by focusing on asset management, reinsurance and captive insurance we will achieve the pre-eminent position in the region,” Kamal said.
“The change in our focus marks a new strategic phase for the QFC Authority, and will ensure that we continue to build on our success and create a sustainable financial services sector both for and in Qatar.”
Insurance professionals attending MultaQa said the QFC plans and its renewed focus on reinsurance, captives and asset management had “underlined their confidence in Qatar” ahead of the discussions.
But QFC is setting its sights further than the Gulf region. Bosses believe Qatar’s growth potential lies in its role as a global financial hub and conduit for trade between east and west.
QFC Authority’s acting chief executive and director of strategy and planning, Shashank Srivastava, said: “Regional capacity is growing steadily and starting to challenge the traditional dominance of cessions abroad, primarily to London, Zurich or Munich. Our analysis indicates that there is potential for captive formation in Asia and the GCC [Gulf Co-operation Council], with 1,496 potential captive parents in Asia, excluding the GCC, and 72 potential captive parents within the GCC.”
Qatar, he added, is “well down the road” of becoming the pre-eminent hub for reinsurance and captive insurance in the Middle East.
Reinsurance start-up Q-Re is an example of this growth, but, as its chief executive Dermot Dick explained to delegates, it is Qatar’s position as an eastward-looking business hub that is central to its prospects.
“The global economic recovery is Asia-led. For that reason, our Afro-Asian footprint is helpful for steady growth. We also miss the volatility that derives from exposure to increasingly erratic weather trends and weak economic growth in the USA and Europe,” Dick said.
MultaQa delegates heard that the QFC has strong domestic regulation and, unlike some of its neighbours, Qatar has the attraction of strong regional capital paired with a yearning to train and retain a domestic workforce.
The QFC’s three focuses are underpinned by initiatives to ensure that insurance business have in Qatar everything they need with regard to training, technology and regulation.
Training is led by the Qatar Finance and Business Academy, while technology initiatives comes in the form of Qatarlyst, a world-class insurance trading platform for participants across the globe.
To serve QFC’s aims of promoting reinsurance and hosting captives, delegates at MultaQa were invited to discuss the prospects for risk management in Gulf.
A keynote speech by Swiss Re’s chief risk officer, Raj Singh, stated that the only way to ensure that strong risk management principles pervade through an organisation is to appoint a risk officer at board level.
Delegates also heard that the Takaful market is going through an astronomical rise. Takaful, which has grown from $5.3bn in 2008 to $8.8bn in 2010, according to an Ernst & Young report, was described as a “key regulatory focus” of the QFC.
Qatar may be small, but if the change of strategy by the QFC and the ambitions set out at MultaQa are anything to go by, it also has the potential to be mighty.
MultaQa, meaning ‘rendez-vous’ in Arabic, is an annual event and has been running since 2007. Key discussion points at MultaQa 2010 were:
- Qatar’s place in the market has been ‘enhanced by the global crisis’
- Qatar, with a diversified economy and strong oil and gas revenues, is well-placed to exploit the global economic recovery, delegates concluded.
- Looking East
- Middle East economic and insurance growth ‘will be driven by Asia’. Arabian Gulf insurers discussed new international dynamics after the financial crisis.
- Strategic shift
- The QFC underlined its new focus on reinsurance, captives and asset management.
- Risk management is ‘a boardroom issue’
- Swiss Re chief risk officer Raj Singh told MultaQa delegates that the issue should go right to the top of organisations. His speech was followed by a quizzing from Munich Re executives on what Swiss Re had done to improve its own risk management since the financial crisis.
- Captive opportunity
- Large corporate groups could benefit from a stronger negotiating position with the international insurance and reinsurance community if they establish their own captives. GR