RAK Insurance: Stepping up to the challenge

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By Andrew Smith, Chief Executive Officer, RAK Insurance

 

 

 

 

2015 was a challenging year for the insurance market in the United Arab Emirates. While total insurance premiums significantly rose, premium rates continued to drop. RAK Insurance’s strategy is to grow its market share by maintaining its commitment to becoming a leader in providing bespoke and differentiated products to its target market segment. Innovation in product offering, value for money, improved benefits, wider customer delivery options and holistic customer service are just a few of the areas that set RAK Insurance apart from its competitors.

Corporate governance highlights in 2015

RAK Insurance has continued to place significant importance on implementing a robust corporate governance culture. The actions initiated in 2013 for introducing corporate governance procedures were implemented in 2014 while further improvements and enhancements in 2015 ensured an agile and sustainable culture.

The board of directors, fully committed to its accountability to all shareholders and regulators for the performance of the company, ensured that the organisation prospered with its continued support of the management team. 2015 was also notable for being the year in which RAK Insurance’s first female board member was elected, providing diversity
and broader representation of the market.

RAK Insurance strongly believes that to have the best corporate governance practice is commensurate with having the best management practice within the company. The executive management, together with the board of directors, strictly adheres to the highest ethical standards, sets appropriate business goals aligned with management, taking into account the stakeholders’ value, and has a reporting system structured to provide transparency and accountability. The organisation of the company is structured to ensure good corporate governance, with delegation of authority at the centre of its philosophy of empowerment and transparency.

The UAE Insurance Authority has started a programme of improved regulation of today’s dynamic and competitive market. For its part, RAK Insurance board of directors, along with the chief executive officer, decided to appoint additional staff to strengthen the existing internal controls and compliance monitoring. In this way, the company ensures compliance with all applicable laws, rules and regulations, including but not limited to the corporate governance discipline and standards.

Risk management and compliance systems in place

In order to address the need for continuous, up-to-date governance in the company, a head of risk management was appointed at the beginning of 2015. Through the collaborative efforts of the internal audit, compliance and risk management departments, an implementation programme was designed that includes reporting systems ensuring transparency and provisions of regular feedback on matters affecting the various stakeholders. A compliance self-assessment questionnaire, based on insurance authority laws, federal laws, board of directors’ directives and any other regulatory laws encompassing the insurance market, was prepared to ascertain the adherence of RAK Insurance.

A department-based, company-wide report is prepared by the compliance department on a regular basis to ensure that respective departments are aware of any compliance issues so that necessary actions to mitigate discrepancies can be taken immediately. Regulatory reporting timetables are prepared, circulated to all the departments and is monitored closely so that submissions to regulators are completed on time.

FATCA analysis for the company was undertaken in 2015 and the inputs shared within the company, which in turn has implemented the recommendations in the first ever unit-linked insurance policy launched by the company.

Anti-money laundering

Money laundering is becoming an increasing area of focus for governments and sanctions in the UAE. In adherence to Money Laundering Law 13/2015, Article 6, all employees in the company have been trained to identify money laundering and are assessed as part of the company’s approach of continued anti-money laundering assessment. 

“RAK Insurance strongly believes that to have the best corporate governance practice is commensurate with having the best management practice within the company. The executive management together with the board of directors strictly adheres to the highest ethical standards”

Effort has been exerted to ensure that agreements are in place with all parties who have dealings with RAK Insurance including broker agreements, reinsurance agreements, vendor agreements and third-party agreements.

Managing risk

Risk management in RAK Insurance has continually evolved in 2015 and some of the highlights include:

■  A concrete risk management and risk governance framework was approved by the board of directors

■  Policies, procedures and process flow documentations were created and implemented within the company

■  Company-wide risk register as per ISO 31000 standards was created and quarterly risk reports are generated and shared with the executive management

RAK InsuranceIn accordance with the goals and objectives, and to complement the growth of the company within a sound ERM framework, the risk management department has embarked on a journey to create a sophisticated risk appetite statement that will help the company ensure adequate capital is maintained to provide coverage for expected and unexpected losses. It will also provide clarity on risk aggregation and risk diversification and act as a tool in selecting corporate level risks and returns and identify what risks and how much risk can be taken by each department or line of business and corresponding returns.

The risk appetite assessment framework and implementation programme ensures that it reflects the board of director’s vision for the business, is consistent with RAK Insurance’s control framework and is capable of providing strong leadership and support for the process to proceed. An advantage that the company has is the is the ability to determine the appropriate level of capital to absorb extreme losses associated with risks that do not lend themselves to controls.

How RAK Insurance remained competitive in an overcrowded market

RAK Insurance has been in the UAE for more than 40 years and has seen various changes during this time. Online commerce is set to grow in the UAE, although brokers remain the ‘preferred channel for larger clients’. RAK Insurance makes sure that it offers a range of products through its online channels and now has motor, health, personal accident, critical illness and life products available. Innovation has become key to the recent success of the company and will continue to be a driving force because the company does not rely on selling traditional insurance products. Rather it is leaning towards more innovative offers. The company continually develops bespoke products that will cater to the needs of corporate clients who require a more one-off or tailor-made solution. RAK Insurance also realises the importance of offering products to the individual client. Selling a greater number increases the company’s customer base while at the same time spreads the risk and provides greater diversity to the market.

National Bank of Ras Al Khaimah’s acquisition of a 79.23 per cent stake in RAK Insurance in April 2015 created an opportunity to expand the distribution of insurance products to the bank clients. Bancassurance offers a great potential for the expansion of RAK Insurance’s market.

Future plans

RAK Insurance’s board of directors and executive management are united in their vision to have a strong, corporate governance culture within the organisation, while healthy and transparent internal functions radiate to the external perspectives. The company makes an ongoing commitment to monitor and address challenges, implement and develop effective mechanisms to communicate with all stakeholders and to continually develop a culture of ethics and honesty. 

The company is continuously improving on the strategies set forth in order to achieve the goals of the company.

 

About the Author:

Andrew Smith is an experienced head of business with significant experience in conventional and Islamic insurance across the UK and Middle East. An insightful strategic thinker with a proven track record of developing business plans and building sustainable businesses across the Middle East. Have developed, maintained and enhanced long term business relationships with Board level and regional regulatory bodies as well as a proven implementer of strategic business plans.