Abdul Rahman Al-Baker, executive director of financial institutions supervision at the Central Bank of Bahrain (CBB), said the 2009 trends seem to point to underwriting results that have been stable over 2008 in Bahrain, while investment income is now starting to regain some of the lost momentum from prior years.
Al-Baker said the regulators of insurance firms should continue to be proactive and closely monitor licensees’ investment portfolios as part of efforts to keep abreast of market fluctuations.
Al-Baker, while addressing the 6th Middle East Insurance Forum that is being held at the Gulf International Convention Centre Gulf Hotel, said CBB believes that certain insurance niches could be further developed to address the region’s true insurance needs.
He said the strengthening of underwriting practices could benefit companies in retaining more of their profitable business rather than fronting a large portion of very profitable business.
This year’s theme for the forum titled back to basics, he said, is in recognition that the insurance industry has to refocus its strategies and examine the underlying fundamentals of operating a successful insurance company. “The past few years had allowed companies to count on investment income to boost their overall operating margin. However, the year 2009 was a reminder that insurance companies cannot always count on their investment income to shore up the bottom line.
While the financial crisis did not have significant impact on the insurance sector when compared to other financial sectors, it was a wake-up call and forced companies to go back to the basics of good underwriting practices and investment analysis and to re-examine how to improve the bottom line of the core business that is insurance. There is a definite need for the insurance industry to strengthen its foundations, and this is why the time is right to look back and review how best to tackle the development of the regional insurance markets,” he added.
