Bahrain Insurance: An Overview of Independent Insurance Manager Braxtone Group by Ayman Al-Ajmi

Interview with Ayman Al-Ajmi, Chairman and CEO at Braxtone Group

What is your assessment of the insurance sector in the region, especially in light of the global pandemic? What is Braxtone’s scope of business and presence in the industry?

The insurance industry tends to be a reflection of the economy. With the exception of the reinsurance sector, the direct insurance is not an economy in its own. It is a reflection of what the economy produces. We insure what has been created. It usually lags about six months behind the economy. We are not the upfront indicators. The pandemic has had a great impact on the insurance industry, the majority of which has been positive. Commercial line insurance, due to the size of companies and capitalization, tends to be affected by the international market due to the reinsurance that is placed. Because of the pandemic and the slowdown of the economy, the insurance rate has gone up. In property insurance, throughout the GCC and including Egypt, all the prices have gone up, which is very unusual especially for the property side of the business which tends to be very competitive in the region. It has quite an opposite impact on the consumer lines, such as motor and health insurance. The results have been positive and most of the countries in the region saw growth. These types of coverages are locally covered with very little need for reinsurance. The lockdown in the region here meant that we did not drive as much and we were worried about going to the hospital. That even had a good mental impact on the doctor side, that you are not going there for every little thing. We saw positive results in the industry in both motor and medical. There was growth due to privatization of medical insurance in the region. Overall, there is a slowdown or recent indicator saying we are going to see about 2% growth in the industry. There are outliers like in Bahrain due predominantly to decrease in sales of vehicles, which is the biggest portion of the industry. But there is a movement on the privatization of healthcare. So, although that indicator shows that there is going to be a decrease in the gross written premium, that indication can change similar to in Oman. Kuwait is on the growth side definitely due to medical insurance for retirees. It is a big program and the regulator as well is similar to Saudi and there is going to be growth. As an industry as a whole, we have been notorious of being dinosaurs. Technology has never been our pursuit. We do not have that technology when a customer calls to actually give them an answer. Imagine calling your bank and trying to get information about your bank balance and we are not able to give them the information they need because the technology we have does not support us. We are put in a position where instead of going like the development of phone technology from a public phone to the phone at home to analog to now you have the entire world in the palm of your hand, we were forced to be like the kid in the middle of Africa where they did not have that progression. They had probably a public phone and within a very short period of time, they have a smartphone. That is what the insurance industry is now dealing with. We are not going through this progression of growth and in certain areas we need to. We have investment in InsureTek and Braxtone is coming into the video technology that we developed with our partner Virtual i in addition to TASWEYA, the settlement platform that we have graduated from the Central Bank of Bahrain sandbox. These are leaps. I dealt with these types of problems 20 years ago when I got into the industry and came back to the same problems, and I contribute to those problems. I was the CEO of multiple insurance companies, but they were never on my radar. I came back as a provider to the industry, and we were providing the same service. We started bringing all these problems to us and it created the same issue that we are not utilizing our team to the best of their abilities. These technologies did not take baby steps. We scrapped the old model and gave them a new advanced technology that is going have that part of the business. The idea came from the check clearance that the banks do. 30 or 40 years ago, banks used to meet to exchange checks. The insurance industry still does that. Now, it is a routine job that no one actually follows. That is what we are trying to do with these technologies – these routine, repetitive transactions are dealt with in that way. The insurance industry is going to see a lot of disruption in the service side and in the penetration side, which is very weak in the region. Just a few days ago, one of the insurance companies here called Solidarity brought a concept that was just a normal concept in the US where you pay your motor insurance premium on a monthly basis. In the US, you do not think about it. You do not pay an annual premium. Now, with the telecom company, STC, you can insure your car and get your premium deducted with your phone bill. Prior to the pandemic, that was just unheard of. The penetration will improve. The services will improve. The transparency with regard to the services is one of the biggest hurdles we are facing as an industry because we are not looked at in the best of lights by our clients. These changes from technology to healthcare to the way we transact business will change. That monthly payment is not possible without the technology. For the platform we are bringing in, the transaction for a claim usually takes on average six months and we are suggesting for it to be completed in 25 days. Without the technology, it is not possible. We could have brought this way before and put the regulation, but it cannot be implemented. We are talking about almost futuristic types of services like image recognition in claim settlement. You actually take a picture of the damaged vehicle and get the estimates in 15 seconds. With that independent technology expertise, now, you as an individual have more faith on what that estimate is. If you want to sell your car, the artificial intelligence through image recognition can estimate the value of the car. So, when you go to these secondary markets of pre-owned approved cars, you have trust that an independent expert has given you the figure. The insurance industry touches every aspect of all industries, and we cannot afford to operate as we used to anymore. We have to go from public phone to a smartphone in almost every service we provide.

What are some of your main products and services that you offer through Braxtone?

We are a very unique company. There might be some companies who are similar to us in the US, but not in the region. We are modeled after operations in the US that we are actually trying to introduce to the market. We are in Bahrain as an insurance manager, which basically means that we manage insurance companies on behalf of shareholders. So, instead of actually creating a management team, you outsource that entire operation to Braxtone. We did that for three companies for AIG. Most of us are ex AIG, as well. Until the end of 2019 beginning of 2020, we were the official representative for AIG in Bahrain. We also manage what is called captive insurance. About 80% of captive insurance companies are US risk based. Braxtone also handles claims services and claims management. Adding to that, we do what is called a run-off management. We are the only company who actually have on-ground experience. We do professional services for the insurance industry. When there are difficulties or when insurance companies want to focus on their core business or with run-off or managing a captive insurance company or a claims management, we are the company to come to. When we have a company under our management, we are their insurance manager. So, we do the underwriting, we do the claims, we do the reinsurance dedicated to that one client. In one aspect, we do manage the entire operation of insurance and we provide insurance across the entire spectrum from medical, life, or general insurance. But there is a concentration and focus on P&C, property and casualty insurance, more than the life side of the business.

What are some of your new advancements and how are you improving the insurance sector through your offerings in the region?

We are in Bahrain as an insurance manager, which basically means that we manage insurance companies on behalf of shareholders. So, instead of actually creating a management team, you outsource that entire operation to Braxtone.

For Braxtone, we have noticed that advancement needs to be implemented such as claims management, which we do a lot in the UAE. Again, we brought the problems from the insurance industry, and we are dealing with it now. We are dealing with having staff situated in certain areas and utilization of the staff, turnaround time, updating the insurance company of the progress of the claims settlement. With a lot of expertise coming to investigate fraudulent claims, we brought in technology to enable us to flip the model on its head. Instead of talking about days, we are talking about minutes and hours for servicing them. We did something similar with the recovery platform, TASWEYA. That transaction, although lucrative on an annual basis, which we have done for multiple insurance companies, is not sustainable to do that and to grow. We have digitized that entire process and have made it adaptable in a way that can take you from zero to 100 right away. No acceleration is needed. We have tried to bring innovative solutions to our clients. One of these solutions is captive insurance management. Captive insurance companies are basically companies who are dedicated to one client. For example, we are providing service for a company out of Saudi called the Alturki Group and they have multiple organizations. We started a company for them as their own insurance company dedicated to them and we manage it on their behalf. That solution was, up to 20 years ago, only for the elite, the Fortune 500s where 70% of them own capital. It is looked at as a US product that initially started in the 80s where they utilize the Caribbean as a domicile. But in the last 10 years, that has been reversed and the idea behind captive is that it is becoming a risk management tool. People are not just looking at it as a way to reduce your taxes, but to actually manage your risk in a better way and have a dedicated team that services you. Not only that, there is a reverse migration in the US right now, where these companies started moving their domicile captive insurance into the mainland. North Carolina and Vermont are the fastest growing domiciles for captive from companies migrating from the Caribbean to the US. That limitation where only elite get that service came to an end. 80% of the growth in the last 10 years came from small to medium companies. That service is not available in the region here. Braxtone is the only insurance manager regionally to provide such services. We are also the only firm in Bahrain that provides these services. It is such a unique service that now it is at the tip of your finger for most of the companies around the region. That is the DNA of Braxtone. In my last job as the CEO for AIG in Bahrain and Saudi, I was also the Sharia compliance officer for AIG. Coming outside the corporate world, starting with AIG as a client, there are always certain types of activities that somebody with my background will do, and I could not do them. The straightforward path is to go and open either a broker or an insurance company. We did not see that we could add anything. Braxtone’s unique service, unique business proposition, is that that we will take your problem, we will turn it around, and we turn it from a disadvantage into an advantage. We go from dealing with the claims and not being able to update your client in a meaningful way for the next product and having it be something that you just want to deal with and get it over with, to now being a competitive edge that you are servicing your client. That is what Braxtone does. That is who we are. If we are not going to make it faster and more economical to our client, then what is the need for us?

What are some of your success stories and awards you have won?

We won the award for the Best Business Project Dependent on Mobile Technology with our partner, a Swiss company. We had been working on this for about three years prior to the pandemic. We service insurance companies and we take their problem and it becomes our problem. One of the problems that we face is that we have to survey a car for damage or to insure a car. That time of travel and having that expert go from one Emirates into another in UAE was time consuming. The cost was making it prohibitive to grow in the same way we thought we should grow. So, with our partner, Virtual i, we created that technology with our technical support where you can send the link to the customer and you are able to videotape, take a snapshot, and the expert sitting behind the screen is able to assess the damage. The turnaround time prior to that technology was at best 24 hours, but on average, about three days. We reduced that to at best within one hour and on average practice within three hours turnaround time. That was a game changer. That technology is called Fahes. Hopefully we can win an award for TASWEYA as well. If it is adopted here in the market, there are 60,000 transactions in Bahrain multiplied by two, three movements within that claim. That would be over 200,000 transactions that will be moved from purely paper based to a fully automated platform.

What is your inspiration? What drives you to do what you do?

It is really difficult to make people understand that I am excited about insurance. That is not something that usually is considered inspirational. I am the guy who went from high school to getting a degree in insurance. You do not finish high school saying you want to study insurance. I finished my degree in risk management and insurance. During college, similar to medical insurance syndrome where every time you learn about a disease you think you have it, I had that with insurance. Everything that happens on TV I analyze from an insurance standpoint. That is where my passion and learning the science behind insurance grew into a career. Finding solutions to problems that exist that I have dealt with as a manager and as a CEO of an insurance company where you have the limitations of corporate and the limitations of cost and actually bringing the new idea instead of focusing on what we need to do today, Braxtone gave me that platform. We have an R&D section that creates certain products and services without the benefit of creating income in the near or medium future. I go back to the recovery part that is an obscure part of the business that I lived with at the beginning of my career. But when I rose in the ranks and became a CEO, it was an afterthought. With Braxtone, we went and invested in that while no one else was looking at it. That is what the Braxtone platform gave me and gave the team. I like bringing people in at the beginning of their careers and actually opening the door and seeing them grow. I am not trying to be a dreamer here. Actually, a lot of the executives in Braxtone went through that bootcamp. I am not the easiest to deal with. It is rough. I learned that when I was in the US. I originally lived with an American family trying to improve my English and the father was a high-ranking officer in the Marines. They recruited me to play soccer with them. I used to see how we dealt with them in the training and with the movies and we adopted that in Braxtone. It is like Full Metal Jacket, but we tone it down a bit. We have several examples in Braxtone of young, innovative people. No conventional wisdom applies. Everything is changeable. Everything is adaptable. That feeds on how we consult the government on foreign direct investment and insurance for Saudi. We are managing the entire run-off for AIG for three entities and achieving figures and advancement in a very short period of time. AIG admits that it was the fastest run-off in their history, at least in the region. We are now appointed by the Kuwaiti Insurance Authority to advise them on insurance regulation and resolving persistent issues that lingered for quite a number of years. Our products are never off the shelf. We look at the client and we design the solution for them, specific to their needs. This is what we want to be and that is a dream come true to me that I have a small part to influence not just a company, but now a market and a country. It is something that I never thought I would see. Reality sometimes is better than a dream. You could have these dreams, but reality can surprise you.

For more information, please visit: www.braxtone.com.

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