“Growth without profitability is unsustainable. Hence the businesses should be underwritten and priced in a way that all the inherent risks are considered,” Abdul Rahman Al-Baker, Executive Director of Financial Institutions Supervision, CBB told the MEIF 2013.
“In addition to this, it is very important that insurance licensees address the investment risk by developing an investment strategy that is highly diversified and does not have concentration in a particular sector or high risk assets. Employing Asset Liability Management (ALM) technique and methodology ensures that the asset portfolio matches the liability profile of a business. Implementing risk management policy and strategy whereby Underwriting, Pricing, Investment and operational risks are managed effectively, is vital for achieving profitable growth.
“Sustainable growth in business could also be achieved by expanding regionally. It has been observed that, although local insurance players are expanding their business locally, there are few who have ventured out and have expanded their business regionally. Expanding regionally opens up huge growth opportunities that could generate profitable income for companies that have the vision and the leadership to capitalize on them effectively,” he added.
“For sustainable business growth it is vital that the proper business segment is chosen for expansion. Bahrain has the highest life insurance penetration in the GCC. Although the penetration is still below the global life penetration, there is tremendous growth potential. According to a recent study, the life insurance sector in the Kingdom is expected to grow at an average of 14 percent between 2011 and 2015. Due to the huge untapped potential for long-term insurance business in both Bahrain and the whole Mena region, it would be sensible to invest in this line of business. As we know that long-term insurance business takes a longer time to break even compared to a non-life business, a mechanism could be devised so that any one stakeholder is not unduly strained in the formation and running of a long-term insurer. The mechanism may work out in the form of public-private partnership or some sort of joint venture arrangement that could cater to the long-term insurance needs of the whole region. This will not put strain on any one stakeholder and could be more sustainable in the long-run,” he said.