The insurance sector in the Gulf is all set to take up the cause of small- and mid-sized businesses in a big way. Global and regional insurers are equally interested in signing up to do so.
AXA Gulf has confirmed plans to get into the SME space in a big way, with businesses in Saudi Arabia and the UAE being the primary focus, at least in the initial phase of the rollout.
"We are launching a specific set of products dedicated for SMEs; our objective is to build a strong presence," said Jerome Droesch, CEO for the Gulf and Middle East. "We started off with the large corporates, but we need to do more with SMEs as it is only 3 per cent of our portfolio.
"AXA's priority is to bring out products covering the health and property needs of SMEs and then gradually build up the portfolio. The target is to have a 10 per cent coverage with SMEs on our annual gross premium written in three years." And AXA is getting the personnel to help them achieve the results.
"One of the main challenges is to acquire the local flavour to reach out to SME clients," said Jerome Droesch, CEO for the Gulf and Middle East.
"To get over this, for instance, we will recruit Emiratis who can then provide the local understanding.
"It's very important we do the same in some of the other Gulf countries as well, notably Saudi Arabia. We have a global strategy, but at the same time it needs to be flexible enough to answer the needs of the individual markets.
One problem that has dogged the insurance sector historically in doing more within the SME space may well have to do with how they defined such businesses."
In the European context, the SME space can extend right from the local corner store, either self-employed or with two or three employees, to companies employing 300 to 500 employees. When the need comes to define a SME in a Gulf marketplace, insurers have generally grouped clients paying an annual premium of below Dh50,000 as small and those paying upwards of Dh500,000 as medium enterprises.
"The challenge for insurers and brokers is the service resources required to provide professional and competitive insurance coverage and at affordable prices to small enterprises," said Mustafa Vazayil, managing director of Gargash Insurance. "More and more brokers and insurers in developed markets are using the technology platform with package policies covering various exposures in a single document.
"There are a large number of underinsured and uninsured small businesses in the UAE and this is a market that is attractive to both brokers and insurers if general insurance products can be developed on a cost-effective basis and delivered and serviced professionally."
An obvious challenge the insurance industry will have to mount is to get their pricing on the SME-specific products right. Anything viewed as too expensive will just not resonate with their target clientele.
"This segment is not fully aware or is educated about the severe impact their businesses can have in the event of a physical loss or if they run into any liabilities to third-party person or property arising from their business operation," said Vazayil.
From / Gulf News