In spite of the continuing boom in many sectors, especially in the construction and manufacturing, insurance, as an industry, is still in its development stage, in most of the GCC countries. A major reason for the underdevelopment of insurance is an acute shortage of skilled professionals in the area. The region heavily depends on an expatriate work force — mainly from the Indian subcontinent, Jordan, Lebanon and Britain — who have had training and skill development in their respective countries.

Regulatory bodies such as Dubai International Financial Center (DIFC), Bahrain Monetary Agency (BMA) and Saudi Arabian Monetary Agency (SAMA) are currently processing applications from a good number of insurance and reinsurance companies, desirous of setting up operations in their respective territories. These companies, once licensed, would be more than pleased to use local expertise, if available. The move will also help the respective economies to reduce the number of unemployed among nationals.

(The council of Ministers last week licensed 13 new insurance companies in the Kingdom in a move that will dramatically change Saudi Arabia’s insurance market.)

Demand for Professionals

There are also reported moves on the part of authorities to gradually open up the sector to more competition from foreign companies. Once again there will be a huge need for qualified and skilled insurance professionals to manage their operations.

Being a dynamic science, the methods and processes of insurance are always changing. To be successful, insurance professionals constantly need to look for ways to increase their knowledge and skills. This is where investment in insurance education can make a big impact by creating a pool of skilled professionals from the young and upcoming national graduates to exploit the increasing potential in the sector.

Surprisingly, however, the number of employees in the insurance sector with professional qualifications is very limited. Even within the broker community, who are supposed to be experts in risk analysis and efficient market placement, the number of qualified professionals is at a “premium”.

Countries such as the UK and Germany where insurance contributes enormously toward the GDP by way of invisible earnings, have universities which offer dedicated programs in insurance. The students who pass these courses are almost assured of a decent opening in the sector at a very young age and gradually climb the ladder by gathering experience and expertise.

Need for Local Training Institutes

While there are also prestigious institutes such as the CII (Chartered Insurance Institute) in London, the American Institute of CPCU (Chartered Property and Casualty Underwriters) in the US and NIA (National Insurance Academy) in India, which offer internationally recognized professional certification for those who successfully qualify for their diplomas, associateships and fellowships, there is hardly an institution in the region which can claim to be a breeding ground for insurance professionals.

The governments in the GCC countries have also set up regulatory bodies with the objective of monitoring and regulating the operations of insurance companies, reinsurance companies and brokers, but it is not sure whether the persons employed in these institutions have the requisite level of know how and technical infrastructure to perform their job to the highest standards. Insurance department employees from various regulatory disciplines, and with varying levels of experience, need to learn valuable skills and practices by way of a structured, professional development path, on a continuous basis, in order to do a good job of regulating such a complex sector as insurance and offer adequate protection to the shareholders and public.

It is high time the authorities and industry leaders gave some serious thought to investing in insurance education so as to offer a qualified local population capable of effectively managing this highly technical sector.

There is also scope for training institutions to develop insurance regulatory programs, which will verify that a candidate has achieved elevated standards of expertise in subject areas deemed critical for a regulator in today’s insurance marketplace, such as financial analysis and examinations or market conduct and analysis.

The recent opening up of a new chapter by Chartered Insurance Institute in DIFC is a bold initiative, but we need more of such institutions in the region.

(V.A. Tommy is deputy general manager of Al-Rajhi Company for Cooperative Insurance, Riyadh. The views expressed herein are his own and not necessarily subscribed to by his employers.)