The Qatar Financial Centre Authority’s director of strategy outlines the attractions of a hub-in-waiting
Q: What are some of the Gulf Cooperation Council region’s attractions for international (re)insurers?
A: It’s a story of growing GDPs, growing population, budget surpluses and the GCC governments’ ambition to diversify economies, leading to significant investment in infrastructure and industry. In insurance, it’s about low penetration (in Qatar, 0.8% against a world average of 7%), a growing awareness of the benefits of insurance and a favourable tax and business environment.
Q: What is driving some of the double-digit premium growth in the region?
A: Qatar’s GDP has been growing at 14% in real terms for the past five years – it is set to grow at 16% this year alone. You’ve got enormous investments by the GCC governments in infrastructure and industry, backed by growing awareness of risk management and insurance.
Q: Is professionalism growing in the primary market?
A: This is definitely noticeable and is largely a result of greater demand from investors in terms of return on equity and return on assets, better trained staff and better facilities, aided by the Chartered Insurance Institute opening up in the region and ourselves opening the Qatar Finance and Business Academy (QFBA). It’s also a function of local firms expanding abroad and transferring their learning and knowledge back home.
Q: How did the financial crisis affect the region’s economy?
A: There was definitely an impact – it’s impossible to think of the region as an island unto itself. Coming out of the crisis, I think this region has snapped back as a whole much quicker than the rest of the world. And a large number of investors have started viewing this region not as much as an old-school source of capital but as a destination of capital because of the growth and investment opportunities.
Q: What does Qatar offer as a financial centre and how is it different from Dubai and Bahrain?
A: There are several factors that will encourage insurance firms to establish practices in the QFC. Think of the legal and regulatory structure, the ease of set-up and the growth prospects. The QFC legal environment is based on English common law, allowing 100% ownership and complete repatriation of profits. The QFC provides firms that have operations based outside the QFC, with access to the local market, allowing them to deal in local and foreign currencies.
Q: What is the rationale for the Qatarlyst electronic trading platform, and what will be the impact of the recently announced purchase of RI3K?
A: Qatarlyst is a web-based platform that can be accessed from anywhere in the world, which makes it very cost-effective and ideal for multinational transactions. It shows the QFC Authority is leading the industry as a whole. The purchase of RI3K significantly increases the scale and the scope of the Qatarlyst business, allowing regional brokers and insurance firms to place and accept large commercial insurance risks electronically. We also expect the regional firms to benefit from RI3K’s interface with London and the international markets. In turn, RI3K’s customers will benefit from Qatarlyst’s speedy functionality in areas such as (re)takaful claims and accounting. The combination will help accelerate the development of the QFC and our ambition to become a hub for the GCC region and beyond.
Q: How about some of the softer business issues that might influence the choice of the GCC as a base?
A: The region is two hours ahead of London and three hours behind India. With superb airline networks, it is a perfect link between the West and East. A lot of work has taken place across the region over the past decade to get the infrastructure up to speed. In Qatar, this includes the Doha Metro, which it is hoped will begin construction in 2011. The new Doha International Airport is another asset.
Q: What construction projects are planned or under way in Doha and the wider region?
A: There’s $87bn worth of projects currently under execution in Qatar and about $100bn in the pipeline over the next three years. The Pearl-Qatar development is a man-made island that will accommodate about 40,000 residents – phase one is almost complete. The Lusail Development is a $5.5bn development, which will house 200,000 residents. Education City has campuses of universities such as Carnegie Mellon and Texas A&M, helping to build Qatar as a hub for developing local talent. And the Qatar-Bahrain Friendship Causeway will cut the travel time between Doha and Bahrain to 40 minutes. GR