Many congratulations to RAK Insurance and of course to you Andrew for being awarded the Ethical Boardroom Best Corporate Governance Insurance Company Middle East 2015.
Thank you very much, pleasure to be here and I would like to thank Ethical Boardroom for bestowing such a wonderful award on RAK Insurance.
With the Insurance Industry in the Middle East growing at a tremendous rate, so has the need to strengthen regulatory frameworks in order to foster good corporate governance and transparency. Here to speak today about the challenges and opportunities in the region is Mr Andrew Smith – CEO of RAK insurance.
So what is the company’s approach to corporate governance and what challenges have you faced in this ever evolving regulatory landscape?
About a year ago we started to focus more on corporate governance approach as we could foresee regulatory changes coming, we could see international standards that were coming to the UAE and so we took a decision as a company to strengthen our position in corporate governance, regulation and compliance at the same time. I think from challenges, it’s something new to the region, it’s got greater emphasis, greater focus since maybe mid 2008-2009 following the financial crash, but we have taken a leap and we have taken the advantage of that to try and get a head start on some of our competitors, but to differentiate the proposition that we can offer our clients and also to our shareholders.
So in your own opinion, does corporate governance have the same meaning across different industry sectors?
I think there are lot of similarities across different sectors, it’s about control, it’s about company behaviour, it’s about individual behaviour within the organisation, but there will definitely be some areas that differentiate the insurance sector from other sectors.
What are the compliance-related challenges you face most frequently in your company?
I think the challenges that we tend to face the most are the enforcement, not only by the individual companies but also by the regulator as well, we’ve seen a lot of changes coming through the regulatory framework in the last eighteen months which I think is for the good, but the challenges are is to ensure that these are taken on board by the companies and are then adopted by those companies as part of a practice, rather than of something extra that they need to do.
So it’s about embedding it into the company culture.
So how can the company’s compliance policies be improved, communicated, enforced and applied better?
In terms of the compliance policies, we took a very positive approach back in 2013 and we developed a technology based solution to communicate compliance policies and other policies to our staff, this has enabled them to look at those policies on a daily basis to ensure they are kept up to date with the latest changes in the rules in the regulation and to ensure that as the business develops and grows then they’re behaviour and they’re adherence to those compliance points are maintained. I think from a regulatory perspective, they also need to educate the insurance companies, they need to educate the market that there are benefits from governance and there are benefits from compliance, if the industry is going to mature and continue to grow as it will do.
What procedures do you have in place on how employees can report concerns, issues or potential violations of laws, regulations and the code of conduct?
We have a policy of whistleblowing, which is published, all members of staff can access the policy and should they find that they need to raise an issue from that whistleblowing policy, then anonymously they can contact me, I don’t know who the sender is but I know the details of the issues they are raising which then gives me an opportunity to investigate and report if needed to the audit committee which is part of our company structure and even to the board if appropriate.
So we introduced a policy that has been made public to our members of staff and we have an anonymous way that staff members can actually report that to me.
Insurance companies face multiple risks across many aspects of the business. What do you think is the best risk indicator?
We have a proactive approach to risk management, recently we employed a new Head of Risk and he’s really been tasked to ensure that all risks that cover all aspects of our business are properly managed, reviewed and if needed mitigated, and this ranges from areas of operational risk, financial risk, market risk and clearly obviously the main risk we have is which is our insurance risk.
So we take a very proactive approach to managing risk, I think RAK insurance continues to grow and it’s continuing to grow ahead of the market, it’s grabbing market share from it’s competitors and for me to have a comfort to continue with that, I need to make sure that those risks are mitigated and managed properly.
Is there a comprehensive risk exposure for all lines of businesses or is it always best to keep the analysis on individual risk measure?
We break it down, we actually look at the risk at an overall level and then we will look at the individual risks that maybe are underlying that main overarching risk, so we actually have a fairly comprehensive framework that we’ve developed in conjunction with our board to ensure that risks both at a sort of overarching level but as an individual level are managed and controlled and reported back on a frequent basis.
As RAK Insurance is a growing company, how do you foresee the company’s governance compliance status in the next five years?
It will continue to evolve, I think the policies will continue to become more sophisticated but for me the main thing will be about developing a culture within RAK Insurance where it’s second nature where governance and risk, compliance become part of the daily norm and is not seen as something new or obstructing business, but it’s there to facilitate a growing company and to ensure that RAK Insurance continues on a path of growth and prosperity.
Finally, what are the major challenges the regional Insurance sector faces and how can RAK Insurance overcome these challenges?
I think one of the major issues that’s facing the region insurance players is the price of insurance, we see an ever increasing pressure on price, they keep softening and drawing back and that’s making it very difficult for insurance companies to build on the profitability of their businesses. I think one way that we are looking to overcome that is being innovative both in terms of our product, our technology and our delivery and I think innovation is the one area that a lot of insurance companies including RAK Insurance will need to get better at, if were to remain profitable to grow our market share.
Thank you Andrew
Thank you very much.