Executive sits down to talk shop with Max Zaccar, who was elected in May 2015 to be the president of the Association des Compagnies d’Assurances au Liban (ACAL), the association of the Lebanese insurance industry.
E How do you assess the situation in the insurance sector in the year to date?
The figures show that we had a 6 percent increase in our premium income in the first quarter. It was less in the second quarter and growth dropped back to 1 percent but I believe we will end the year with an increase of at least 3 or 4 percent, as we did in 2014.
E Did you see any areas where demand or market responsiveness to insurance fluctuated in the economic environment of 2015?
As insurance companies we follow the development of the economy and the economy has been developing in 2015, so in fact we had an increase in all lines of insurance. The only problem is the intensity of competition. Competition has brought rates down and that is why the increase in total premiums is not as much as it should be. If we take for instance the marine business, the results of Port of Beirut were good but the premiums were going down. We also saw a lot of competition on fire insurance and other lines of business. Thus, having a 4 to 5 percent increase in premiums for 2015 will be a very good result.
E There were signs from the real estate market that transactions and issuance of construction permits were going down again. Did that affect engineering insurance?
I personally have not seen analytics of the figures in the engineering business but when you see all the construction cranes around the city [it’s evident that] there is no crisis. It is possible that many of these are small buildings that do not buy contractors’ all risk (CAR) insurance but building activity is going on and large projects insure for CAR.
E In 2015, there were a few high-profile fire incidents that were covered by the media, such as the blaze that gutted Skybar. Were there any signs that moral hazard in the fire insurance has been higher than usual in 2015, because of economic difficulties?
First of all, the insured loss at Skybar was not catastrophic according to what I know. There was probably a severe impact [to the company] due to the loss of profit, because it was at the beginning of the summer, but the actual damages were not that large. I don’t think we have any increased moral hazards in the claims that we experience in Lebanon.
E One of the highlights of the year for the insurance association was the conference you held about oil and gas insurance. Did the event fulfill your expectations?
Definitely, because we showed the authorities that we are serious in thinking about insuring the oil and gas industry. We want to make an insurance pool by the ACAL member companies that will be managed by ACAL. The conference was a good presentation to the Lebanese Petroleum Administration (LPA) and the Ministry of Energy [and Water] that we are serious in doing this.
E Has progress been made in regard to the legal question of mandating oil companies to rely on local insurers?
We have asked for a change in the [oil exploration] law and this has to be signed by the Council of Ministers. This is not yet finalized but we have the support of the energy ministry and of the LPA.
E You are preparing to host the General Arab Insurance Federation (GAIF) conference in May 2016. Is that project on course?
Yes. We have a very good team looking after the preparations and wherever we go to conferences abroad, the response is excellent. There is real good interest from international insurance companies to come to Lebanon for the GAIF.
E What are your expectations as far as overall business development or regulatory developments in 2016?
The problem with all legal statutes is that everything is frozen and so we don’t see any real change. We have a very good minister of economy who comes from the banking sector and understands the need of the insurance market.
E Any comment on the situation at the Insurance Control Commission (ICC) and the changes in leadership there?
We have an interim head of the ICC. We were expecting a new head but this didn’t happen because the Council of Ministers did not meet [on this appointment] or wasn’t in a position to approve.
E What are your plans as far as the relationship with the insurance intermediaries goes, especially as the Lebanese Insurance Brokers Syndicate (LIBS) also elected a new president in 2015?
LIBS also changed many of their board members and we welcomed the new board in early November. We have created a joint agenda that we will be working on together, so we hope to develop the relationship with them.
E The insurance industry has often not been very visible when it comes to corporate social responsibility. Does the association pursue any new initiatives in this regard?
We might be a little bit behind in this regard but I believe that each insurance company has its own CSR policies. We at the association are trying to do our part, especially in environmental issues. We are recycling as much as we can and we are making many changes to our building, to save energy and so forth.