‘The insurance industry needs more women’

Elie Nasnas, general manager of AXA Lebanon, on a changing industry

Elie Nasnas is general manager of AXA Middle East

Elie Nasnas is the general manager of AXA Middle East, a Beirut-based insurer affiliated with the leading global insurance brand, AXA. He is also the newest member of the invitation-only MENA Insurance CEO Club, a regional club which is a voice of advocacy on behalf of the insurance industry in the Middle East and North Africa.

Currently the MENA Insurance CEO Club has a limited membership of fewer than 20 chief executives. What attracted you to join the club?

It is an opportunity to share future views with sector professionals from all over the region. It is a good think tank for us to brainstorm and exchange views on how the markets in the region will evolve. This was what attracted me most.

How do you assess the MENA insurance sector today in terms of regional integration of insurance activities?

It is not easy to integrate as we don’t have similar regulations [across countries]. Once we would have similar regulations and regional regulations, things could be much smoother. But we should take the initiative as professionals to push the regulators toward this.

You have tried this to some extent, but integration of regulations has not really been progressing at breakneck speed. What do you think of the speed at which sector alignment is developing?

First of all, the regulators are coming together through their associations. This is a good move. [Integration] depends on the speed at which new regulations could be implemented, which in the case of Lebanon is not easy. I think that the [Insurance Control Commission] is doing a very good job, given what means they have. It is not an easy job for them but they evolved toward much greater professionalism in a very quick manner in the past two years. The market report is getting more and more accurate and meaningful. The annual report of ICC is very good work.

The ICC has recently initiated some changes to the motor insurance reporting requirements and some companies in the sector seem to be a bit concerned about this. What is your view?

What [the ICC] is asking for is quite significant. The new reporting requirement is linked to the split of claims and premiums related to material damages, to have ratios on the material damages. Yes, it is quite a workload for the companies, but we have to do it. What [insurance association] ACAL asked the commission to do is to give more time for the companies to implement the required changes in their information systems, but we should have this type of information.

Do you think motor insurance rates in Lebanon should be calculated more in accordance to actuarial principles and are other innovations called for?

Definitely. Whenever you talk about a line of business with high frequency of claims, the role of actuaries is very important. We don’t have many actuaries involved in setting motor premiums and we should have more professional underwriting. In my opinion the most important measure should be to impose a time frame for paying claims. The claims for material damages are what we call short-pay tails, so there is no reason for claims to go unpaid for months. I am suggesting to ACAL that we put a timeframe. If the law is implemented, we will have a lot of [claims] recoveries between companies. As settlement will be mostly between companies, there is no reason for delays and [having timely settlements] would prevent cash flow underwriting. This would help to have proper market conduct from the companies.

In your portfolio as AXA Middle East, what are the strongest performers and the most promising areas?

We have a balanced portfolio. We are performing well in health, and are planning to have a larger market share in motor. Our market share in motor does not reflect our overall market share, so we need to position ourselves in a more significant way in motor insurance. If there is proper pricing and fair competition this will help us to expand in this segment.

Is the planned expansion in the compulsory or non-compulsory business?

On both sides.

Do the high commissions currently charged by intermediaries in motor insurance pose a problem for you?

I think that the market will regulate itself, like it did in the medical business. If you go back to the late 1990s commissions on the medical side were very high. The market suffered huge losses so we made some pricing and commissioning review, and the market regulated itself. I think this will also happen in motor insurance. And as long as there is a bigger market with a large volume and lower commissions, intermediaries will find that their incomes will increase, provided that we won’t have the same situation recurring as in compulsory bodily injury where we have some cartels. This should not be allowed to happen again.

If we take a brief look back at the overall market in 2013 for you and other insurance companies, were there any good surprises, or any bad ones?

I always said that the market would grow by five to six percent and this is what happened. We as AXA Middle East performed better than the market in our growth, and we have a strategy to differentiate ourselves by differentiation of products and benefits — especially in our quality of service. The strategy is paying off and this is how we are achieving our growth.

Are your profits going up?

2013 was a good year; we made about 20 percent growth.

On premiums or on profits?

On premiums and more than this in profits. We should have had 35 percent growth in profits.

Where are the growth opportunities in 2014, given that the Lebanese market is not very large and the regional situation is not good?

We are evolving in a very difficult macro environment and growth is difficult, but once you have a very motivated team and a very clear strategy where you want to head, I think we should grow again.

But that will be mostly growth in Lebanon?

For the time being, yes. It will be growth in Lebanon by heading to new regions where insurance does not yet have a strong market penetration. It is quite difficult because these regions currently don’t have stability, so we should be gaining market share by stressing again and again our quality of service.

So you aim at gaining market share from other companies?


Before you opened yourself up to the partnership with AXA in 1999, you were a family-run insurer. How do you see the succession issue in the still family-centric Lebanese insurance companies?

When we made the move for the partnership with AXA, we were convinced that if you want to be a major player in the insurance business, it cannot be a family business.  In my opinion, the insurance business is much more complicated than banking, and riskier than banking. So if you aim to reach a significant size, you need capital, good governance and accountability. In my opinion this is very difficult to get with family management. If you have a family-owned company and good governance in the management, this can be a solution. On the other hand, you have to create an institution and set up teams where people can foresee a career path.

How many insurance companies in Lebanon do you see as having institutional management?

I will abstain from answering; I cannot judge my peers. I can say that we gained a lot of experience with management and governance in AXA, and the joint venture that we made was a very successful model because it was not imposed. We are proud of our evolution from a family business to an institutional mentality. It is not yet finished but I would say we’ve completed 80 percent of the journey. It was a very good move for our generation and the next generation to come, which will be totally immersed in the institutional way of thinking.

Is the next Nasnas generation already set on working in insurance or are they pursuing other interests?

Part of them are in the business with AXA, [but] not here, which is very good to see. They have to work in the institutional way to discover other horizons.

How many employees do you have today?

About 160. We have succeeded in building a very good team and are very lucky to have a team of very high-quality people who evolved a lot in their way of thinking and managing the business.

What other message, if any, do you want to share with our readers?

The message is that we have more and more women in the business who are very ambitious and very professional.

Is that also on the level of senior management?

At AXA [Middle East] we have 70 percent women in the team, and more and more are gaining [higher level] positions. We have 40 percent in senior management.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.