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Feature
JORDAN BUSINESS SEPTEMBER 2010
Rest Insured
In the local insurance market, the Jordan Insurance Company is arguably at
the pinnacle of success stories. Jordan Business talks to Managing Director
Imad Abdel Khaleq about the company’s performance, expansion plans and
his thoughts on the Jordanian market.
onsidered one of the leading
insurance companies in the
country, the Jordan Insurance
Company (JIC) has come a long way
since it first opened its doors in 1951.
Last year alone the company’s premium income grew by 4.2% to JD39.9
million, with a record technical profit
of roughly JD4.64 million (the highest
in five years), compared to JD4.57 million in the previous fiscal year.
C
In a marketplace still staggering to recover from a global financial downturn,
the posting of such figures is quite impressive. While many insurance companies suffered losses in the market,
specifically from over-extended portfolios in the Amman bourse, the JIC had
a fairly impressive year, and 2010 sees
the company marching onward with its
9.9% share of the local insurance market. Having grown its assets by 10.7%
to reach JD71.5 million, JIC set out to
solidify its portfolio footprint beyond
the borders of the Kingdom, branching
out regionally to places that include
Dubai, Abu Dhabi and Sharjah, with an
agency presence in Kuwait. Moreover,
JIC has recently transferred all of its
branches in Saudi Arabia to the Arabia
Insurance Co-Operative Company, of
which JIC owns a 12.2% equity stake.
In July, Euromoney named JIC the best
insurance company in Jordan, based
on an annual insurance survey conducted by the organization, considered
the leading journal on international finance. The survey is considered one of
the best barometers of service quality in
the global insurance market, and is the
only international poll that consolidates
the opinions of the world’s corporate
and financial institutions. The honor is
quite timely as JIC also attained a B++
rating for financial strength from the
A.M. Best Company in late December
JORDAN BUSINESS SEPTEMBER 2010
Feature
we care about the client, and the di- companies. While the Gulf region,
verse range of products and services specifically the UAE and JIC’s presence in Kuwait, brought in roughly
we have to offer reflects that.”
JD7 million from the company’s JD40
million premium income last year, AbRestructuring The Giant
In achieving JIC’s current success, Ab- del Khaleq says JIC is also looking to
expand into other parts of the region,
named JIC the best insurance including Libya, Egypt, Kurdistan and
based on an annual insurance Sulaimaniah in northern Iraq.
2009. The rating indicates JIC’s strong
level of risk-adjusted capitalization, as
well as a “robust underwriting performance and established business profile
in the Jordanian insurance market,” according to a company statement.
In July, Euromoney
company in Jordan,
survey conducted by the organization…
“It takes a lot of work to achieve that
kind of recognition,” JIC’s managing
director, Imad Abdel Khaleq, told Jordan Business. “Our employees were
working tirelessly to help restructure
the company and position it as the leading insurance entity in the Kingdom.”
Abdel Khaleq is largely credited as
the orchestrator of the company’s recent upward trend and has brought his
extensive years of experience in the
German reinsurance sector to his directing position at JIC. “I worked with
the largest German reinsurance company, Munichre, for 15 years, so coming to Jordan from Germany was not
a simple move, to say nothing of the
fact that I worked in reinsurance, as
apposed to insurance, where the latter
is much more customer-oriented,” Abdel Khaleq said. “I had to adapt myself
to the new environment, and met with
almost each and every client upon taking up the new position.”
del Khaleq pursued a path of restructuring since his hiring in 2005, a move
that he claims was needed in order
for the company to remain on top in a
highly competitive local and regional
market. According to Abdel Khaleq,
“JIC is constantly changing with the
times,” highlighting key elements of
the company’s restructuring path that
include an IT system overhaul. “Our
latest undertaking is our IT system,
which is currently being restructured
to a state-of-the-art status. The restructuring should be complete during
the first quarter of 2011, and will aim
to sustain an insurance system that is
as paperless as possible.”
“Like other insurance companies, we
did suffer some losses during the financial crisis from our investments in the
stock market,” referring to what some
analysts deemed an overinvestment in
the stock market by local insurance
companies. “However, our core business continues to be insurance, with
roughly 28% invested in the stock market. Most of our market investments
are tied up in blue chip companies, as
we are very picky about what we invest
in locally and regionally.”
Educating The Masses
Expansion may be timely for the halfcentury-old JIC, with the region presenting tremendous growth in recent
years. According to one recent study
conducted by Booz and Company, the
MENA region has experienced 26%
compounded annual growth between
2005 and 2008 – a period many industry analysts refer to as the insurance
boom. Regional leaders of the MENA
insurance market include the UAE,
Saudi Arabia and Morocco, with Lebanon and Jordan showing the greatest levels of insurance penetration, at
3.4% and 2.3%, respectively, which
the study attributes to an increase in
public awareness campaigns on the
importance of insurance.
Restructuring is also focusing on the
core operations of JIC’s branches, especially those beyond Jordan’s borders. “We restructured our branches
abroad, with new people and new systems, but it is tough to compete with
some of the bigger insurance companies abroad, especially in the Gulf
Indeed, JIC’s core values seem to cen- region,” Abdel Khaleq noted, arguing
ter on customer service, a field that his company has remained focused on
many Jordanians have often criticized retaining its niche clientele.
as lacking in quality. When it comes
to Abdel Khaleq, there is a bold rec- Despite the cut-throat competition,
ognition that, at the end of the day, his the Gulf region has emerged as a new
business is all about service. “We are
“Our latest undertaking is our IT system, which is
a company of ideas and this is what
makes us different. We have the best
currently being restructured to a state-of-the-art
service in Jordan and we truly care
status…to sustain an insurance system that is as
about our customer. We are the fastpaperless as possible.”
est payer in Jordan, with no insurance
claims being held over for more than arena of investment opportunities for The study reflects important on-the24 hours. We have account managers JIC, which is looking to upgrade its ground realities when it comes to the
who sometimes handle a single ac- presence in various markets that in- local market and public perceptions
count while others are responsible for clude Qatar – a country that has proven regarding insurance, which in Jordan
20 smaller accounts. In other words, difficult to tap into by most Jordanian have never been overwhelmingly posi-
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JORDAN BUSINESS SEPTEMBER 2010
Feature
tive. According to Abdel Khaleq, what
it comes down to is education – empowering the client with knowledge
to convince them that insurance works
defeat unenthusiastic public perceptions regarding insurance. You have to
talk to them and explain to them how
insurance can help them.”
surance-minded, especially with new
products and services being offered
in the marketplace. “JIC has expanded to cover other forms of insurance,
including medical and educational.
“In Jordan, you really have to educate your
Families can now see the benefit of
paying into education plans for their
client in order to defeat unenthusiastic public
children so as to not worry about afperceptions regarding insurance…”
fording their university education
in their benefit. “In Jordan, you really According to Abdel Khaleq, Jordani- when the time comes.”
have to educate your client in order to ans are generally becoming more inThe so-called “life business” line,
JIC staff campaigning for Petra to become one of the
which includes life, medical, personal
new seven wonders of the world
and education, accounted for roughly JD6.1 million of JIC’s income in
2009, and is considered to be the fastest growing line for the company.
Such forms of insurance are still relatively new to the local mindset, especially in a country where only motor
insurance is compulsory.
Problems On The Road
Recently, the Jordanian government
raised mandatory motor insurance
premiums by 25%, a bylaw that has
garnered a great deal of criticism by
local insurance companies. While the
government endorsed the bylaw as a
proclaimed attempt to citizens’ rights
by compensating them for losses suffered during motor accidents, most
of Jordan’s 28 insurance companies
fear financial losses, especially as
the bylaw stipulates that insurance
companies also raise the value of
compensation to the consumer. The
sector has repeatedly called on the
rate to be floated and Abdel Khaleq
agrees. “They [the government] increased the premium, but they also
increased the liability by around
67%,” said Abdel Khaleq, who feels
the premium rate is too low. “With
the liability that high, the positive
market effect that they are hoping
for will actually yield very opposite
results. In my opinion, the only solution is to float the rate. It should
be up to the consumer to make their
own decisions regarding pricing, so
that the market naturally balances itself out. Motor insurance is the only
compulsory insurance in the country,
so it is essential to keep it alive.”