Supporting new credit insurers in the Middle East and Africa

Across the Middle East and Africa (MEA), credit insurance is becoming increasingly essential – offering businesses of all sizes protection from buyer non-payment and supporting stable cash flow so they can grow confidently, and so emerging, developing, and established economies can flourish.

Recognising the region’s potential, new credit insurers have emerged, and others are showing interest. Today, we explore some of their most commonly asked questions and illustrate our answers using a local success story – Etihad Credit Insurance (ECI).

Q: What credit insurance solutions does the MEA region need?

A: Credit insurance needs vary throughout MEA, so understanding those needs and building solutions to support them is an important first step in developing a new venture. Throughout the region, a common thread is the need to support micro, small and medium sized enterprises (MSMEs), and credit insurance can play an important role in this. In the Middle East, supporting MSMEs can enable non-oil economic diversification. And in many parts of Africa, MSMEs are an economic backbone, so supporting them can increase stability and help overcome adversity.

Etihad Credit Agency (ECI) is a strong example of how understanding the market can lead to a successful launch. It was created in 2018 by the UAE Government, specifically aiming to grow the UAE’s non-oil economy. Its launch of short-term credit insurance, easily accessible via a user-friendly digital portal designed to suit the specific needs of local MSMEs, has made ECI an integral part of the country’s diversification efforts.

Q: How can credit insurers navigate regulations in MEA?

A: As is the case globally, credit insurance startups must work closely with regulators to ensure they meet legal requirements. These vary from country to country and include local laws, regulatory approvals, and structuring reinsurance treaties. Early engagement with regulators and aligning solutions with local regulations is essential. ECI aligned with the local regulatory framework from the outset, ensuring a faster and more streamlined approvals process. ECI also ensured its products were Sharia-compliant – a common requirement for operating in the UAE and Middle East. This was supported by Tinubu’s platform, which has Sharia-compliant capabilities.

Q: How can new credit insurers embed efficiency?

A: A tech-driven approach to credit insurance is vital. The MEA region is home to some of the world’s youngest and fastest growing digital-native populations, and digitisation has accelerated at pace. From the start, ECI applied a digital-first strategy which not only streamlined operations but also provided a competitive edge in the market. Using Tinubu's end-to-end solution enabled ECI to automate its processes such as policy issuance, claims processing and credit limit requests, and deliver a frictionless and efficient customer experience.

Q: How can credit insurance startups manage data?

A: Access to reliable financial data is critical for assessing creditworthiness and managing risk. To make informed underwriting decisions, new credit insurers need to tap into both international and local financial data sources. ECI’s partnership with Tinubu gave it access to a wealth of international financial data in real-time and risk expertise, helping it navigate foreign markets with confidence and offer tailored solutions to customers. Q: How can a new credit insurer in MEA build credibility? A: Collaboration with financial institutions and reinsurers is vital to building credibility and trust. Reinsurance agreements not only provide financial stability but also reassure customers that their insurer has strong backing. In our example, ECI prioritised the development of partnerships with international reinsurers such as Swiss Re and Munich Re, so it could spread its risk and build a more credible business.

Q: How can credit insurers in MEA ensure long-term viability?

A: Credit insurance is a highly nuanced industry, so in-depth experience is critical to building a sustainable business. Startups need to build a core team of experienced professionals who understand the intricacies of credit insurance, including underwriters, claims managers and risk experts. ECI’s recruitment strategy was an important factor in its early success, helping it scale quickly by ensuring the right expertise was in place early on.

The decision to build or buy a core operating model can also impact scalability. A ‘build’ model may allow for more customisation, but it requires more time and resources to develop in-house. A ‘buy’ approach offers an immediate, fully integrated solution, and comes with the advantage of rapid scalability. Leveraging Tinubu’s ready-to-use system enabled ECI to begin operations in less than 12 months.

Q: Where can I find more information on launching a new credit insurance business?

A: Tinubu has supported the launch of several new credit insurance businesses. Success requires strategic planning and effective execution across all stages – from market analysis and product development to regulatory compliance and market entry strategies.

For a detailed guide, download our new white paper: Launching a new credit insurance venture.