Fateh Bekdache General manager, Arope Insurance
In the early 1990s, bank insurance — insurance underwritten by a bank’s own insurance company and distributed as a bank product — started to penetrate the market heavily. The phenomenon occurred for a number of reasons. First and foremost, after the war a lot of people went out and bought new cars. This resulted in the introduction of car loans — and then housing loans and credit card loans. All these new loans gave a boost in business for insurance companies, as people with new cars began realizing how important insurance is in a country where accidents are the norm. Prior to that, in the 1970s and 1980s, only importers, exporters and industrialists used insurance to cover their assets. Nowadays, insurance is considered a must, and the fastest growth we are seeing is in the personal line.
Abraham Matossian President, The Insurance Association of Lebanon
Just because the region is not insurance minded doesn’t mean that we are doing well. We are not doing well. Our penetration should be in the vicinity of 75 to 80 percent, then we can say that Lebanon is as insurance minded as Europe or the United States. But to do so, you need to have a set of compulsory rules like [the ones that] exist everywhere else, which we don’t have. Plus, you need to have a high enough income per capita to give the possibility to the Lebanese to buy insurance. But you should never compare Lebanon with the Arab Middle East countries because it is not the same mentality. It is completely different.
Farid Chedid Managing director, Chedid Re
The biggest challenges are related to the fact that there are too many insurance companies. The regulation [and] the current laws are inadequate and cannot cope with the growth of the economy and the growth of the industry. At the same time, there is no regulation that protects local insurance companies, so it’s not only about controlling the insurance companies, but it is also about regulation that helps protect the industry. The percentage of the insurance industry, as a percentage of the economy, is very small. If you look at the assets managed by the local insurance companies, we’re talking about around $1.5 billion to $2 billion. If you compare this to the banking industry — we are at [$110 billion] for the banking industry — the insurance industry is [less than] 2 percent of the size of the banking industry. If you look at the overall profitability of the insurance industry in Lebanon, we’re talking $30 million or $40 million for the entire industry, whilst the banking industry is at multiples of this figure. So, insurance in Lebanon as an industry is struggling, although you have some very good and exceptional companies that have managed to perform despite all of these problems. But the industry needs support. This is for sure.
