In the short two months since the Bahraini regulator released draft rules on insurance aggregators, the Kingdom’s apex bank has extended an e-broker license to a UAE homegrown digital finance marketplace in its efforts to cultivate the insuretech segment to drive the digitalization of its Takaful and insurance sector.
After building a strong base in the UAE and Saudi Arabia over the last eight years, Souqalmal.com is preparing to launch insurance comparison services in Bahrain made possible by it recently securing an e-broker license.
“Bahrain ranks third globally in internet penetration and 10th globally in mobile penetration. Boasting one of the highest online and mobile penetration rates in the world, and a rapidly transforming digital landscape, Bahrain was the ideal market for us to expand into,” explained Ambareen Musa, the founder and CEO of Souqalmal.com.
More than 96% of the 1.5 million-strong population of Bahrain are internet users, contributing to the Kingdom clocking in a higher rate of online purchases as compared to its regional peers while its adoption of mobile internet surged over 70% since 2013, according to the Insurance Digitalization Report 2019 put together by industry enablers including the Bahrain Fintech Bay and Bahrain Insurance Association.
Despite being home to 36 insurance and reinsurance operators, seven of which are Shariah compliant, the Kingdom, like most of its Middle Eastern neighbors, struggles in raising insurance penetration rates, which currently stands at about 2.27%. The tiny Gulf nation, one of the 25 wealthiest nations in the world as measured by GDP per capita, has embarked on an aggressive digitalization agenda to transform its banking and finance industry with hopes of positioning itself as a financial superpower of the Middle East: regulating insurance aggregators was the CBB’s first step in embracing insuretech.
“Although the ambition for digitalization is apparent in Bahrain’s insurance market, only half of insurers in Bahrain claimed to currently offer basic technical tools including a mobile application. As a result, the industry is lagging behind the overall financial services industry especially the banking sector, which is presently ahead of insurers in regard to digitalization. For example, approximately 83% of retail banks (conventional and Islamic) in Bahrain appear to offer both online banking and a mobile application for its customers,” noted the Insurance Digitalization Report 2019.
The approach Souqalmal.com, which raised US$10 million in Series B funding last year, would take in Bahrain is likely to be multipronged, focusing as a distribution channel for Takaful and insurance services, and also as a provider of information to close the insurance literacy gap in the Kingdom.
“By simplifying the financial fine print for the average consumer in Bahrain, the company wants to help residents make informed decisions about insurance,” it said. Almost 45% of the surveyed insurers in Bahrain, according to the industry report, do not provide detailed product descriptions of insurance products online while 34% do not provide online product information at all.