The Kuwaiti government has formed a committee to study and develop the local insurance industry, including its regulation and supervision. The panel is headed by representatives of the Ministry of Commerce with other members hailing from other stakeholders.
Assistant Undersecretary for Technical Support and Planning at Kuwait's Ministry of Commerce and Industry, Mr Abdullah Al-Awaisi, announced this at a one-day insurance conference yesterday, reports Kuwait News Agency.
Describing the step as an essential building block for the future of the insurance sector, he said that the Ministry is evaluating a number of proposals, including draft regulations for the insurance market and the desire among some in the industry for the establishment of an independent body to supervise the sector.
"All proposals will be subject to discussion and consultation with insurance companies," he said. The insurance sector is at present overseen by the Insurance Department of the Ministry of Commerce.
Mr Al-Awaisi said that the Ministry understands the demands of the insurance sector, which is calling for the reorganisation of the market by setting controls that will help inculcate freer and more transparent approaches in the sector.
He pointed out that the reorganisation of the insurance market will be part of a package of economic initiatives and structural reforms that affirm that Kuwait is moving forward in sustainable development through clear steps to upgrade all components of the Kuwaiti economy and the efficiency of all markets.
Mr Khaled Al-Awadi, chairman of the organising committee of the conference, said that pioneers in the insurance sector had agreed that the basic requirement is the need to regulate the market either through the establishment of an independent regulatory body or the enactment of a new modern law or transferring supervision of the insurance sector to Central Bank of Kuwait.
He said that the pioneers of the sector "categorically reject” proposals to place the market under the supervision of the Capital Markets Authority because “the central bank has deeper experience and a more supervisory successful experience".
Mr Al-Awadhi outlined several challenges in the insurance industry that include delays in compensation payments,
establishing new insurers without first undertaking a feasibility study on market needs, depletion of capital and weak solvency, as well as price undercutting and lack of actuarial advice.
He also said that the insurance market has been affected by decisions made by other supervisory bodies in the banking and financial sectors, that had not been coordinated with the interests of the insurance sector.
He said that the shortcomings in the insurance sector warrant urgent action to enact a new modern law to clean up and modernise the market and protect the rights of all parties. The current legislation governing the insurance industry dates to 1961.
The former chairman of the Kuwait Insurance Federation, Mr Abdul Razzaq Al-Wahaib revealed that the Ministry of Commerce had proposed that insurance supervision be transferred to the Capital Markets Authority, and that there had been consultations between the Ministry and the insurance federation since December 2017.
The idea of establishing an independent insurance authority is not new as it has been debated for several years.