Cobalt targets Sharia-compliant demand
The Islamic countries of South-East Asia represent a rich potential area of growth for insurers, especially those able to offer Sharia-compliant products, Richard Bishop, chief executive officer of Cobalt Underwriting, told SIRC Today.
Bishop said that counties such as Indonesia, Malaysia and Pakistan offered a plentiful source of potential business for insurers, especially those familiar with and able to offer Sharia-compliant insurance.
Cobalt Insurance Holdings and its two specialist operations, Cobalt Underwriting Services and Cobalt Advisory Services, were formed in 2012 with the objective of establishing London as a leading global centre for Sharia-compliant insurance capacity.
“When we started we principally focused our efforts on the Middle East as a market,” Bishop said. “We do business in the UK, or inward investment into the UK via Islamic investors, but we wanted to make our product available in the Islamic markets, and the closest Islamic market to the UK is the Middle East. It’s worked quite well for us as a starter market.”
However, according to Bishop, Cobalt has now developed and is targeting new Islamic markets.
“We’ve now been trading in the Middle East for just under two years and we need to expand,” he said. “We have to go to the other Islamic markets in the world as well; we can’t limit ourselves to a few territories in the Middle East as that’s narrowing our market unnecessarily.
“Technically our products are available to anybody—we can insure risks wherever Islamic investment flows. There are 56 nations in the world that are Islamic or which have a Islamic majority.”
Bishop notes that Indonesia and Malaysia are some of the most sophisticated Islamic markets outside the Middle East. Kuala Lumpur has been embedding Sharia-compliance into its financial structure—the central bank there has special regulations for Sharia-compliant activity, he said.
Meanwhile, Indonesia has enormous potential. “It’s the largest Islamic market when it comes to populace—252 million people live there. But in terms of economic sophistication and the openness of the market to outsiders, it’s still a very difficult market to get into. Sharia compliance may be the way that London can have a trading relationship with Indonesia as it evolves,” Bishop said.
He added: “We believe that if you’ve got access to Sharia-compliant products, why shouldn’t you use that as your principal product if you’re going into a territory that abides by Sharia law?”
Bishop admitted that it can be difficult to access markets where incumbent relationships exist. But he pointed out that if London is to remain a leading centre for the global insurance industry it must access areas like South-East Asia and ultimately learn to use the Sharia-compliant culture.
“The insurance industry’s been slow to take up the idea of asking itself: ‘how can we be more relevant in our local market?’. But if you take London as the global wholesale market of the world, we have to remain relevant to all the markets we do business with, otherwise those markets will evolve in their own ways.
“You only have to look at Singapore for an excellent example—as a marketplace it’s developing and evolving at a great pace, and if it doesn’t need London any more. So what are we going to do?
“We have to be constantly on the lookout for opportunities. For Cobalt, Singapore is a natural environment for being able to offer Sharia-compliant products. I’m not coming here to tell them to take what I have to offer, I’m here to find out if they want to take what I have to offer.”
