Developing Risk Management Model for the Palestinian Insurance Sector

The insurance industry is based on managing various types of risks to make profit. Thus, risk management is considered a critical key factor for the success of any company, because risk management will enable the company to manage its risks more efficiently, and more effectively. Risk management situation within the Palestinian insurance sector is very poor and not utilized as it should be; because of the severe shortage of awareness about the importance of it and the scarcity of qualified insurance employees. This research is studying the existing risk management practices in Palestinian insurance sector and examining its existence and its effectiveness. The research sheds the light on the most important risks that the Palestinian insurance companies are exposed to, and increases the awareness about risk management and its importance. This study aimed to achieve three main goals: assessing the risk management practices utilized in Palestinian insurance companies, identifying the main deficiencies of risk management implementation. Finally, developing a risk management model to tackle the deficiencies in the Palestinian insurance sector. This study adopts a mixed method of research; using semi-structured interviews and questionnaire to explorer the current risk management practices in Palestinian insurance sector. The interviews with insurance experts holding senior managerial positions aimed to understand the insurance sector current risk management situation and how the current risk management practices activities are being utilized. On the other hand, the questionnaires were used to gain an adequate perception about risk management activities within the Palestinian insurance sector. Data was collected; from a wider spectrum of insurance sector employees across all managerial levels; to complement the result gain from the interviews. After the completion of data analysis, the researcher found that all insurance companies confirm the importance of risk management to successfully control all other operations within the company. Unfortunately, however, risk management practices are very poor and immature across all levels of the entire Palestinian insurance sector. Furthermore, the severe shortage of qualified and trained employees and the absence of actuarial experts and the marketing methods utilized that depends mainly individuals; makes the management and pricing of insurance services unscientific and unprofessional. The above issues can be used to create a strong perception of the weakness that slowed the growth in Palestinian insurance sector; in order to develop a risk management model that suite the Palestinian insurance sector. This model will help the insurance companies to improve and enhance the process of risk management, in order to improve the sector strength and maintain a sustainable growth.