Dhofar Insurance Company: The story of a rebound

After suffering a major setback, Dhofar Insurance Company rolled out a well-crafted strategy and made a significant turnaround in its operations in a short period of two years. OER takes a look at this unique story of revival

Successful businesses are bound to face headwinds at some point in time. Turning around a company that has a strong presence in the marketplace requires a careful but strong action by its leadership team. It requires leadership with a clear-eyed, objective understanding of what went wrong and an ambitious programme to redefine the strategic focus to change the growth trajectory of the company and turn it around in the face of unprecedented challenges.

Illustrating this powerful lesson is the recent experience of Dhofar Insurance Company SAOG, a major player in Oman’s insurance industry which has gone through a significant turnaround in its operations.

Incorporated in 1989, the company is a pioneer in Oman’s insurance sector. The company has been a prominent player in the industry and has maintained its leadership position in the market over the years with a network of 42 branches including seven regional offices.

In the recent past, the company had identified certain flaws that led to a temporary impediment to its leadership position in the marketplace. The shareholders were quick to respond by electing seasoned professionals and mostly independent board members with expertise in wide-ranging areas such as law, banking, insurance and HR to provide the company with strategic leadership to fix the flaws identified.

The new board under the astute leadership of the chairman– Majid Al Toky, the board conducted a comprehensive review of the company’s performance, identified the problems encountered, devised a turnaround strategy and started implementing the strategic plan. This has resulted in a turnaround within a short span of two years with the company turning profitable in 2018.

So, what did the trick?
Majid, who had been entrusted with the task of steering the company through choppy waters, was aware of the enormity of the tasks in hand in ensuring the company regains its leadership position and emerges as the preferred insurer in the Sultanate. He was also mindful of ensuring that the changes being brought in were not disruptive to the functioning of the organisation.

During the initial period of the board assuming office in 2016, the board roped in the services of a global consulting firm to get a better understanding of the company and the marketplace. Majid added that the findings were debated by the board and an action plan was formulated prioritising key focus areas. The diagnostic study reaffirmed the strong recall value the brand had amongst the general public.

Unflinching support from the board

Majid added that the independence and expertise of the board members was something that was tapped into to engineer a turnaround in the operations of the company. He added that the support of the board in key issues coupled with their deep understanding of the nuances of the finance and insurance was a critical factor. Amongst the various measures taken by the board in 2016 was the engagement with reinsurers and shareholders.

Majid, himself, led the critical initiative of engaging with global reinsurance partners to underscore the inherent strengths of the company and outline various measures taken by the board to ensure that company regains its leadership position. The reinsurers welcomed the transparency shown by the board and reaffirmed their continued support to the company.

With global reinsurers reaffirming their continued faith in the company, the board embarked on a financial restructuring proposal that would involve raising RO7mn from shareholders to fund future growth plans. Majid led the initiative to personally engage with all major shareholders of the company.

The successful completion of the right issue was a major milestone, especially at a time when the equity markets across the GCC were witnessing low investor interest.

Majid added that It was a combination of the vision of the board, support extended by shareholders and the measures taken by the management team that has helped the company overcome most of its challenges.

Setting the house in order

Majid noted that to operationalise the turnaround it was pertinent to bring in control and discipline in running the company. At an organisational level, a new experienced management team was appointed and at operational level, to ensure better corporate governance and standardisation of practices, the board reviewed and approved new policies and procedures including a staff incentive plan to build a culture of ownership and responsibility.

One of the priority areas in the transformation journey was the implementation of an effective HR policy, aimed at maximising the skills and efficiency of the manpower as well analysing the functions of the different departments in the company. This helped the company appoint suitable candidates for various functions.

Says Sunil Kohli, CEO, “If your employees are happy, they will ensure that your customers are happy.” He added that the company attached a lot of importance to impart the right training to its employees.

Dhofar Insurance Company: The story of a rebound

Amongst the various measures taken was the decision to improve the portfolio mix. “We have tried to maintain a good portfolio of businesses, which will improve overall profitability. We are not reducing the focus on the traditional motor portfolio. We are having a good growth in motor, but at the same time we are having a higher growth in other lines of business such as property, engineering, marine, life and medical. We have created a separate life and medical department, which have been identified as growth areas for
the foreseeable future,” says Kohli.

The company has also accorded utmost importance to improving its client relationship. Various measures were taken to engage with key clients, which have resulted in earning their trust.

Kohli highlighted the strong branch network spread across the Sultanate and added that efforts were on to enhance the product offerings to retail customers. The company today attributes a lot of importance to customer service and has a dedicated customer service officer to look into the issues that may impact customer satisfaction. The company has also set up an in-house call centre with online payment gateway.

Dhofar Insurance Company: The story of a rebound  Omar bin Ahmed Al-Shaikh, deputy CEO added that in its journey to increase distribution reach and customer satisfaction, the company was in negotiations to offer bank assurance with leading banks in the Sultanate to enhance its product offerings. Omar highlighted that the moment of truth in an insurance customer journey is claim payment. The company has always honored its commitment to protect the interests of the policy holder and had never defaulted on the payment of a legally payable claim despite the challenges faced by it. This was proven by the excellent claim services the company has offered in the aftermath of the Cyclone Mekunu in 2018.

“We were able to pay majority of the claims soon after the necessary paperwork was done, said Kohli. “One of the claims was more than RO 100mn”. He added that robust reinsurance arrangements had provided quick relief to the customer to ensure that their businesses were back on track after the calamity.

Kohli was also quick to highlight that this was in continuation of the strong legacy the company has in protecting nation assets in the aftermath of various natural calamities to hit the Sultanate, especially Gonu, in 2008.

Key clients of the company have appreciated the proactive measures taken by it.

IK Moorthy, manager of claims at Port of Salalah vouches for that saying, “During the period of Cyclone Mekunu, Dhofar Insurance was the first one to come to Salalah and provide with all their support and assurance. This really helps to assure the insured that the insurance company is there to assist and not to reject any claims. We had quite a few meetings with Dhofar Insurance and we always got the assurance that they would assist us in every aspect of our difficult times.”

Dhofar Insurance Company: The story of a rebound  Elaborating on the cordial relationship his company enjoys with DIC, he adds, “Dhofar Insurance is the front-end insurer for Port of Salalah and we have reinsurers back in the UK. Port of Salalah is dealing with Dhofar Insurance since the beginning and everyone in the company is very happy with their performance. Since the first settlement is coming from the reinsurers, it’s a bit time-consuming; but when it comes to Dhofar Insurance, the claims are settled without any delay. Dhofar insurance has highly qualified staff who are always willing and ready to assist in any issues. This ensures a very good relationship between the insured and insurer.”

Kohli summarised that the efforts undertaken paid off, reflecting in the bottom-line of the company. There was a significant turnaround in FY 2018. The company was going through a period of negative growth on its top line as the company had stopped writing loss making businesses. He however added that the various measures taken by the board of directors in areas such as process, strategy and HR and the focus on the profitable lines of the business, led to an improvement in numbers. Kohli said the focus on the right clientele, the various campaigns aimed at tapping businesses at the branches coupled with the efforts to train employees and motivate them contributed to an improvement in the bottom-line.

Gratitude to Stakeholders

Kohli had a word of praise for the Capital Market Authority, adding that the support and guidance provided by HE Yahya bin Said Al Jabri – chairman, HE Abdullah Salem Al Salmi – executive president and Ahmed Ali Al Maamari – vice president, insurance sector during the transition period was heartwarming.

Omar expressed gratitude on behalf of the company and the employees for the confidence reposed by major shareholders – HE Abdul Aziz bin Mohammed Al Rawas – advisor to His Majesty for cultural affairs, Muscat Overseas Group, HE Abdul Alim Mustahail Naseeb Rakhyoot, Trust International Insurance and RE Insurance Company, Qatar General Holding and Dhofar International Development and Investment Holding Co. for the support provided by them at a critical juncture in the company’s history.

Digital is the way ahead

Another critical area of the turnaround strategy has been the focus on technology and digitalisation. A complete overhaul of the IT system was engineered to facilitate the turnaround.

“The new IT infrastructure will lead to the efficiency of operations, good customer service, good control mechanisms. It would also help us offer the service to our customers on their fingertip, on their mobile apps and other web applications,” says Kohli.

“We want our customers to buy their policies while sitting at home,” says Majid. “I also think that it is of paramount importance to move away from the traditional ways of conducting insurance business. Local insurance companies need to be more creative in terms of conducting their activities and must invest in modernization and transformation. In this regard, we can learn a lot from companies in banking and financial services. There is a clear need to move towards the new digital-led ecosystem, without which the insurance industry in Oman will be left behind. It is not just about buying new systems, but also understand how to leverage such systems to improve efficiency, get a better understanding of customers and to better serve them.”

Currently Dhofar Insurance is the second largest player in Oman’s insurance sector. However, Majid added that the board is seeking to transform Dhofar Insurance to a modern international player following the best global practices.

He thinks that there are many opportunities despite the current challenging economic conditions, considering the level of insurance penetration in Oman. The introduction of the mandatory health insurance will also create new opportunities, but again insurers will have to be ready for it. “Whatever the case may be, I would hope that the insurance industry will be able to capitalise on these opportunities whilst maintaining good business principles to carefully retain risks and move into an era of sustainable growth. This, I think, is where competition should be focused on, rather than merely competing on lowest premium offered to customers,” he avers.

Sharing his prognosis for Oman’s insurance industry, Majid calls for a concerted efforts by all stakeholders towards establishing a stronger insurance sector in Oman. “Some concrete measures will be required to be undertaken by leaders in the industry. Some of these measures would include consolidation as there are already too many insurance companies for the size of the Oman market,” he avers.