General manager for the American Life Insurance Company (ALICO)
E How did the life insurance sector develop in 2005, and what are your expectations for 2006? Do you foresee a boost for the industry from new legislative initiatives?
Our exact results for 2005 are not finalized yet, but we hope to achieve a certain percentage of growth over 2004. For our three business lines at ALICO, life, property and accidents, we have estimates for an increase of about 6% over last year in renewals and about 3% in total collected premiums. For next year, our projection is for a 19% increase in gross premiums.
I think that legislation for life insurance will progress. Actually, the various ministers at the ministry of economy have all been convinced that something should be done about exempting life insurance from taxation, especially life and pension insurance premiums and proceeds. There is a draft law now at the parliament, which gives some tax exemption on life and pension policies. We are just waiting for parliament to promulgate this law and we are pushing and lobbying for it quite hard. There is also a draft for the new insurance law that has been submitted by the insurance association ACAL to the ministry of the economy, for amending the law number 94 from 1999.
E How do you view the potential of the Syrian market for Lebanese insurers?
I feel very encouraged by the opening of the Syrian market. Arope Insurance is an insurance company with a vision for the importance of insurance on the regional level and we are committed to adhering to the highest standards of honesty and being equitable in all aspects of our business. These and the other values that we stand for are what we believe we can bring to the market there, along with doing good business in the long term.
Arope led the way for foreign firms entering into Syria in that we were the first Lebanese insurer to get the green light to set up a private sector insurance company there. It is a sign of the importance of developing regionally and especially in the new Syrian market that one other Lebanese insurance firm also received pre-approval for a license in November 2005, and that we have been so far joined by seven other companies who have requested to be licensed following the Syrian government’s relaxation of restrictions that until recently forbade private ownership of insurance firms.
The Syrian market is also a natural expansion for us because our mother bank, BLOM, was the first foreign bank to establish a private bank there, the Bank of Syria and Overseas, when the government in Damascus liberalized the banking industry two years ago.
To prepare for this regional expansion, Arope’s capital was increased by around 10 million dollars, making it the insurance firm with the second largest capital in Lebanon.
Chairman, general manager, Commercial Insurance
E How do you see insurance premiums developing in Lebanon in 2005, and for the coming year? Do you anticipate reinsurance rate hikes to affect the market?
The insurance premiums follow the economic situation, and I don’t think that the economic situation was very bright this year. I thus would not expect an increase in premium turnover. On the contrary, the cake is so small that I suppose that insurance companies have reduced their prices to maintain the same premium turnover, and in doing so, reduced the total turnover of the country. As for the future, I am an optimistic person and think that the more Lebanon is calm and secure, the more people will invest in this country. We have been the pioneers in insurance and as pioneers there is a lot we can do. Life insurance is still very small, pensions and the insurance of households is also small, and so the future is there. The problem is that people don’t have enough money to pay for this luxury – but the future is certainly very bright in Lebanon.