E: Is insurance awareness growing in Lebanon?
Definitely; for several reasons. The first boost was the introduction of compulsory insurance for expatriates working in Lebanon. Before, there had been many stories about foreign workers having problems. The introduction of this insurance requirement helped not only the ministry and eliminated problems with embassies, but it also helped the consumer in seeing the benefits. Then there was the introduction of motor insurance, which has become more and more accepted over the past one-and-a-half years. Lately, we hear a lot that people do not only want bodily injury coverage but also say it is time to have liability cover for property damage. The most important factor in increasing insurance awareness has come from the banks. In giving retail loans, banks required the proper insurance, such as life, motor or home insurance, from their clients whether it was for a $1,000 consumer loan or a $100,000 loan to buy a house. We experience today that when the loan is paid off, people keep the insurance. We can really feel that awareness has grown and also that people have become sophisticated when it comes to insurance. We noted for example at the Beirut Motor Show that people have become very picky and want to know the terms of a policy. If one bank gives better terms on insurance, they choose this bank instead of going with one that has lower rates on the loan.
E: How do you explain the importance of insurance to Lebanon?
If you look at the whole activity of economy, the insurance sector is not contributing what it is contributing in developed countries. It may be better than most of the countries in the Arab world but it should constitute much more than that. One important role that our sector can play is that once we have started getting involved in the pension program we can give the Lebanese people the incentive to secure their future. We can also give people the incentive to buy Lebanese, if all the extra taxes can be removed for instance on the marine business. It makes no sense that you have to pay nine percent on marine cargo insurance here in Lebanon while you can go next door and don’t pay any taxes. Instead of making people go and buy from offshore companies, I think it is better to remove these barriers. These are major factors that will make the insurance sector a major player in the economy.
E: Arope is affiliated with leading bank, BLOM. Does that translate into a role of leader in the sector?
Definitely. When BLOM started Arope back in 1974, they had bancassurance in mind. Bancassurance, or selling insurance through the banking channel, started to move in Europe in the 80s. I believe it was the first time that a major reinsurance firm – the largest French reinsurer, SCOR, which still is today shareholders with us – a major bank and at that time, a British insurance company entered a partnership. It was a real blend of banking with insurance and reinsurance. I think these partners had really a vision but because of the war, we had to put the brakes. The British then left but the French stayed with us and you can see today what we did and that it is paying off for a lot of people. We are helping many in getting their loans. In the retail loan business, thousands of people are buying their cars and getting loans for their house, all these are done together between Arope and BLOM. We secure that the customer has the best deal in banking as well as insurance. So we always try to accommodate the bank’s customer and get him the best deal possible. If he is not satisfied, he can ask for an upgrade and most of the time he can get better conditions. Indirectly, we are really improving the economy.
E: How is bancassurance going?
It is going very well.
E: Do you mean for Arope alone or sector wide?
I believe it is good sector wide. However, the problem with our insurance sector is that it is not transparent. We don’t have any ways of getting any figures. We suffer a lot from that just as you press people also suffer because you cannot really get any figures on the sector. It is certain that the companies working in bancassurance have shown the strongest growth rates in 2003 and the trend may continue in 2004 because bancassurance is going well. I don’t think any of the providers is complaining. It is a good marriage, a win-win situation.
E: How do you assess 2004 overall in terms of your performance?
For Arope, figures show that 2004 was a good year. With a lot of hard work from our team and the support from our mother company and board and the trust that our customers gave us, we were able to finish the year better than the last. It was our 30th anniversary; we celebrated these 30 years of growth and hard work and are very confident about the future of Arope and are here to stay.
E: What was the most encouraging and what the most challenging experience in the 30 years of Arope?
The most rewarding thing was that we were able to benchmark ourselves as one of the leaders. As you know, we are not one of the leaders in terms of premium income, because we are not after size but after solidity and profit and being well run. We were able to do that.
In terms of challenges over 30 years, we went through a lot. There was the war and changing the head office from one place to the. After the years of war, it was chaos in the insurance sector. The insurance control commission and the insurance department at the ministry of economy and trade were not functioning. The laws were obsolete and almost inexistent. In the last six, seven years, we saw a lot of progress. The 1999 insurance law was a turnaround, even though this revised law was not modern enough. It didn’t cover all aspects of insurance and doesn’t go with the pace of our insurance companies and worldwide trends in the industry but at least we know that there is a law that we can count on.
E: In 2004 a different, entirely new draft for a Lebanese insurance law was introduced to the sector stakeholders. What do you think about the new proposal?
The new proposal is a very modern, very interesting project. I personally found many positive aspects in it, but at the same time, this draft will not go with the laws that we use every day. The old and new cannot synchronize, because all our laws are founded on the French legal code and this new law would not mesh with this. I say this not from the perspective of an insurance man but from the legal perspective. The legal advisors whose point of view we heard, including the vice-president of the National Insurance Council, Dr. Albert Serhal, and our own legal counsel all found that we have to define a lot of things to make this law function.
E: How do you motivate your team of agents and employees to keep a long-term outlook of customer relations and follow your vision and ethics?
All our agents are employees. We don’t have freelance people that come for a quick dollar and go. In Europe it often is seen as better that people move around and corporations think that it is bad for executives and employees stay in a company for a long time, we were keen to create a nice family ambience. For us, it is a plus that we have people who have been with Arope since inception of the company. We try to think globally and see what is happening abroad but when we want to implement here, we act locally.
E: How important are employee incentives in making the company grow?
Bonus is a major part of our structure. Everyone is rewarded at the end of the year based on many criteria. And every job well done is rewarded; sometimes we don’t wait till the end of the year to award employees. If an employee shows something good, he is rewarded on the spot. We give very good incentives and we like to give the encouraging pat on the shoulder. This is something that people appreciate. We emphasize teamwork. We don’t like lone rangers.
E: What was the greatest crisis that you ever had to manage as an insurance executive?
It was back eight years ago in a sector-related crisis. Two companies were established at that time and started by taking a lot of employees and portfolios from brokers and insurers, including us. One of these firms closed down in the meantime and the other went through a restructuring and reshuffling of shareholders. This mass migration of employees and portfolios hit us overnight as a major crisis but it was a good challenge, a very good lesson to learn from. It was not nice to go through a storm like this and it would be nice not to repeat it, but we learned a lot from it.
E: What makes working in insurance exciting for you personally?
Everyday is a different day, every case is different, every claim, every policy is different from the other, so it is really exciting. I think it is the only industry where you work with clients and third parties. We don’t work only with the customers, so you can expect any time to have a claim for a third party coming to you, maybe somebody you know, and maybe somebody you don’t know. We have no two claims that are alike. You meet all kinds of people every day, that’s nice, and the work is diversified in its legal aspect and the technical aspect. The technical aspect is very wide and complex, so everyday I learn something new. I love the interaction.