Page 250 - january-2022-issue-602-part2
P. 250
Gautam Datta
(CEO & Suliman Osman Chief Operating Officer – Watania)
We create opportunities out of challenges
and address them to move forward
Watania is one of the region’s most profitable Takaful institutions. On its special annual issue,
Al Bayan Magazine met CEO Gautam Datta and Chief Operating Officer Suliman Osman and con-
ducted the following interview with them in which they evaluated the year 2021 and the mergers and acqui-
sitions that took place in the region in the last few years as well as expressing their point of view concern-
ing digitalization. They further talked about the difference between conventional and Takaful companies
in terms of digitalization and shed lights on their strategy and results during 2021. Below is the Q & A.
* How do you evaluate the year? important is that the mergers take place with a very specific business plan.
- I define 2021 as being the most challenging year I have faced in my long Sometimes, the mergers don’t work because the objectives are not clear. It is
insurance career. 2021 was obviously different for all of us because of the very important for parties that are getting into these merger discussions to have
Covid but the insurance industry did not face the same kind of difficulties as the a successful business model in front. If there are two companies, whose busi-
rest of the industries and lot of their disadvantages were offset by a much lower nesses have not been doing well, merge and they don’t change their business
claims activity because of lockdown, so as a result many insurance companies model then they will lose. What is really critical is planning the post-merger. If
reflected very strong financials during 2020 but the lack of growth and demand these things are being discussed, then over a period of time, the executions will
and overall economic condition put pressures on business in 2020 and that car- become successful.
ried forward in 2021. As life came back to normal in 2021, all of the pricing defi-
ciency and growth deficiencies started reflecting in the financial results. Arising We worked hard in going back to basic principles
out of that, we now have a situation that underwriting income, which had
improved for most companies in the market, has come into a lot of pressure in * What was your strategy during 2021?
2021. Overall, in 2021 the insurance operation has been a big challenge for - The year was different in many aspects. After the Covid year, it was an
mid-sized and small companies because and it has affected the underwriting increasing challenge in terms of how the market will reshape itself after the
performance for all companies in 2021. lockdowns and how the future will look. There were lot of talks about the new
A lot of the clients’ purchasing behavior had been changed because of the eco- normal and how it will impact the market. From Watania’s perspective there
nomic condition. They have reduced the scope of cover in order to bring down was a solid plan for the company from 2016 onward where we worked hard in
prices but the moment the lockdown was opened up, all the claims activity going ‘back to basic’ principles focusing on customer, product and process, ser-
came back very quickly but all the price discounts that was done could not be vice specially at the time of claim and our people. We built it in a way that our
recovered because the economic condition was still challenging. As a result, business generated profits that were sustainable over 5 year plans. We defined
insurance companies faced a lot of pressure on their underwriting margin. one of core product lines, Medical, by analyzing the market requirements to see
how we can add values to our clients and we built a sustainable model by
The industry has understood the importance of digitalization addressing year after year all the points which were required in the market.
We’ve seen there are some areas that should be addressed immediately at that
* In your opinion, the shift towards digitalization was successful for Watania? time and we addressed it, what we started touching its results year after year.
- Digitalization has been successful not so much as creating new products but Concerning the motor line of business, we wanted to keep the principles as
more by making the products easily accessible to the customers. It has been pure claims management as a separate claims management where the team
successful in terms of its implementation but for it to reach the critical mass and can focus only on the claims management and we’ve built up the analytics for
make that difference on the financials will take a little longer time. You cannot the pricing and how we can drive our premiums. We also correlate the depart-
overnight switch from one business model to another. Overall, the industry has ments together where any movement happens here, the other department
understood the importance of digitalization. At Watania, we are now looking at should be aware about it and accordingly correlate together to reach out to the
ensuring digitalization for the whole insurance journey including the claim ser- ultimate objectives which the whole departments moving for. This is how we are
vice. The whole objective is that a client should be able to get a policy through moving forward in terms of the business plans where we can segregate our
the digital platform and be able to get it serviced even in the time of claim main duties into certain departments and accordingly address our objectives
through the same digital platform. They should be able to log their claim and in line attach it towards where we want to reach in the near future.
through web or WhatsApp, get the directions through whatever the devices
being used and then be able to get all the settlements done through that so that We create the opportunities to move forward
their need to engage with an insurance company physically is minimized.
Even as an industry, I think every insurance company is going through its own * To what extent are you optimistic for 2022?
development stages in terms of digitalization, but the focus is now very clear - We are always optimistic in terms of how we do things because it always
that the companies need to digitalize in order to innovate and progress. comes down to the basics and as long that is right rest will follow. We create
the opportunities to move forward. We always face challenges but out of chal-
* How do you evaluate the mergers and acquisitions that took place in the lenges we come up with opportunities that can build up our future. We create
last few years in the region? the perceptions of our customers’ demands and we address them by our plans
- Ten years ago, we were talking about the importance of M&A but now there and strategies to more forward.
are actual steps taking place. In a situation where we are right now, M&As take
place out of two reasons driven by the way shareholders look at the use of their * How will be your results during 2021?
capital and with the Central Bank especially in the UAE becoming stricter about - In 2021, there is a little bit of growth on the overall gross side but in terms of
solvency regulation, they are pushing companies to capitalize. Many compa- profitability, we will be significantly less than 2020, part of it is because in 2020
nies that have not been successful in the past; their shareholders would say due to the drop in the claims activity the insurance companies got the benefit
why am I putting in fresh capital? In a situation like this, the companies are real- of the financials but all of that came back in 2021 so our claims ratio went up
izing that one way of survival is to do an M&A either get merged, acquired or significantly because we were not able to maintain the same pricing levels. The
look at options of strengthening their capital base. market was extremely tough in that sense. This pricing pressure created a sit-
These discussions started taking momentum especially after Covid because uation where our standard margins got totally squeezed. We are beginning to
people have become more aware of the limitations and the weaknesses in their see price corrections in our insurance product pricing and internally we started
businesses. Most of the big M&As that have taken place are in the banking sec- pushing the price corrections. All in all put together, we should see better per-
tor where the shareholders had a significant role in their execution. Insurance formance in 2022, especially that our target will be to go back to the prepan-
companies are at the early stages of this M&A cycle and local shareholders will demic level performances where our return on equity was in excess of 12 to 14
need some time to appreciate this as a way to consolidate their business. It is percent.
2022 (ôjÉæj) ÊÉãdG ¿ƒfÉc - 602 O~©dG - ájOÉ°üàb’G ¿É«ÑdG 580
