Establishing an insurance provider anywhere is bound to involve complications. However, Asia Insurance, the venture of Faruk Group Holding (FGH) into the Kurdish and Iraqi insurance markets, faces a unique challenge: developing a local insurance industry in a largely deserted market. While this has been an incredibly ambitious project, neither Asia Insurance nor FGH is short on motivation, and Asia Insurance, while still in its infancy, has made extraordinary strides into the market.
Asia Insurance has faced three primary challenges: providing confidence and security to its clients in a new, growing, and relatively insecure environment; collaborating with lawmakers in the KRG and Federal Iraq to shape a legal environment capable of cultivating an insurance industry; and convincing local clientele of the personal benefit insurance provides, despite the lack of compulsory insurance laws. Although Asia Insurance has only been operational since mid-2012, it has begun vigorously addressing these challenges.
As with many other FGH ventures, Asia Insurance strives to operate according to international best practices. This has allowed the company to forge partnerships with many of the world’s largest international insurance and reinsurance companies, such as Munich Re, Swiss Re, Hannover Re, and Zurich Insurance Group. These partnerships provide security and credibility to Asia Insurance’s various stakeholders. In an interview with IIG, Asia Insurance CEO Jamal Asfour noted that these partnerships “have given [Asia Insurance] a huge edge above other local players, and have elevated our reputation significantly.” Indeed, Asia Insurance has already become the largest insurance company based in the Kurdistan Region.
Whenever Faruk Group Holding pursues new opportunities, it always seeks to do so according to international standards. Our overarching goal at Asia Insurance is to compete with major markets in the MENA region. We believe that if the KRG and the central government support the development of the insurance industry, a new era will be created. Asia Insurance is ready to play a central role in that development.
Perhaps equally important is Asia Insurance’s local influence. While the Kurdish and Federal insurance regulatory bodies differ in many ways, Asia Insurance has been certified by both, and is therefore able to operate throughout the country. Furthermore, Asia Insurance is assisting the KRG to improve the legal landscape regarding insurance in the Region. For example, at the moment, foreign investors (as per the 2006 Investment Law) in the Region are permitted to employ foreign insurance companies that remain unregistered in Iraq or the Kurdistan Region. According to Asfour, “if the local insurance industry is to develop, we need the support of the government. We need laws to be amended so that foreign investors will be compelled to utilize local insurance companies.” This, he argues, will improve the local insurance sector immensely and will positively affect the Region’s current account balance.
Additionally, unlike much of the world, insurance in areas such as driving and workman’s compensation are not made compulsory by the government. In car accidents, drivers tend to settle with one another privately, rather than employing the risk diversification and actuarial expertise of insurance companies. This is both inefficient and potentially catastrophic for the individuals involved. As a result, Asia Insurance is working with government to develop laws and enforcement for compulsory use of motor third party liability insurance. However, there is also a public relations dimension to the issue. “Prior to beginning our operations,” said Asfour, “we organized a marketing campaign called ‘Know Insurance’, in which we demonstrated the benefits of having different types of insurance. We believe that personal selling (face-to-face) is the best approach to spreading our message regarding the fundamental importance of insurance.
In terms of future ambition, Asia Insurance is aiming high. The value of the insurance sectors in the individual MENA countries is significant. The insurance industry is worth $5.5 billion in Saudi Arabia and $900 million in Jordan, notes Asfour. These numbers demonstrate the potential growth of the industry in Iraq. With government support, he argues, Asia Insurance could compete with bigger and better established regional competitors. Moreover, the importance of an efficient insurance sector for Iraqi and Kurdish business and society should be properly understood. “Our message is clear,” notes Asfour, “you cannot sustain a strong economy without a stable insurance industry. If Iraq wants to compete with other countries in this region, it needs to develop a strong insurance industry.” After its initial year in operation, Asia Insurance appears poised to play a central role in that development.