With a premium volume of $180 million in 2004, life insurance realized a rise of near 30% over 2003 and accounted for more than 31% of the total reported premium pie of $577 million. Bank-affiliated insurance companies, such as Audi’s Libano-Arabe, BLOM’s Arope and Bank Byblos’ Adir, as well as specialist firms Sogecap (linked with Societe Generale and SGBL Bank) and Bancassurance (an enterprise of Fransabank and BLF) fared very well in their development while the traditional life insurance leaders, Alico, maintained the top role in market share. Another convincing performance came from SNA, which supplies Bank of Beirut as well as several smaller banks with bancassurance products. Executive asked representatives of life insurance companies and bancassurance specialists about the achievements and potentials of these lines.

How do you see assess the role of bancassurance for the Lebanese insurance market and where are the growth potentials and untapped niches?

Pierre Talhami, manager, Beirut Broker Company

So far, bancassurance has proved to be excellent for us. In 1996 we were the first to introduce such products to Lebanon in form of four products which were developed with the Italian Assecurazione Generali. Today we have 9 bancassurance products that are sold at all Bank of Beirut branches. These are in three categories: life and capitalization; personal accident; and general accident insurance.

Recently, we were the first to introduce medical insurance policy sold over the counter and underwritten directly, with no medical check required until 45 years of age and only an interview with the doctor for people between 45 and 55. This policy is priced 50% below the market price for health insurance and targets mainly young and healthy people with a $500 deductible on hospitalization under a policy that covers up to $125,000 in total medical expenses, at a cost of $300 per year, which is $25 per month. It can be combined with a loss-of-income compensation policy that provides the insured from the second day of hospitalization with $200 a day in compensation if due to an accident or $100 per day from the third day if due to sickness. At only $3 per month for this B-Compensated product, we introduced combo sales of health and loss of income compensation products in January 2005. 

Over the past three years, using bancassurance products developed by SNA, we sold 7,000 new policies in 2002. In 2003, most of these policies were renewed plus we sold 7,200 new policies, followed in 2004 by sale of 7,600 new policies and again renewal of most existing policies.

Beirut Broker handles business for Bank of Beirut and our target is for 40 % of all Bank of Beirut clients to buy at least one bancassurance product over the counter. As of now, about 18% of the client base holds a policy. We feel that we are very well positioned in the market because we have one of the largest distribution channels. 

How do you assess the potential of Lebanese insurance firms to penetrate regional markets with bancassurance products and which companies do you anticipate to succeed in the Lebanese insurance market?

Rene Klat, general manager, Adir Insurance

We have developed bancassurance that does not exist as such in Middle East and Arab world. Thus we have specialties that we could develop in the Middle East. As we are part of the Bank Byblos Group, we will definitely follow the ownership of our bank in Sudan and Algiers. We are also trying to make a partnership in Jordan with local banks and insurance companies but I must admit that things are sometimes slow in this region. I could also mention Syria but there is no insurance law in Syria. However, we have been following corporate clients of Bank Byblos for quite a few years there.  

We hope that with the intentions of the United States to spread democracy there could be a lot of development in the region but I hope especially that there will be an economic opening.

The Lebanese life insurance market is big. We have a retirement plan with 5,000 policies in force over two years. I think now that everyone has confidence in the Lebanese economy we can all hope that the young people who brought the revolution will insist on new faces. We have fantastic people and a lot of wealth in many areas, from human resources and climate to history and archeology.

However, I always state that there is no hope in the mid-term for insurance companies that are not backed by big banks and in the long-term for those that are not connected to international insurance companies. In 2004, we could prove the profitability of the investment by our international partners by distributing $1 million to shareholders. They are very happy with us. We are a real institution.

Where are the best development potentials for life insurance providers in Lebanon and how do you expect the domestic market to develop?

Jean-Francois Jaboulay, general manager, Sogecap Liban

We are the second company in life insurance after Alico and 2004 was a very good year for us. It was only our fourth year of activities but we managed very well.

In 2004 we had lower growth than in 2003 and it was our intention to go this way. In the moment, term life products are the best for us while the line of capitalization products doesn’t give us much profit because the law doesn’t allow more than 50% of life premiums to invested outside. We could do very well if we could place 100% of every contract in specialized unit-linked products.

Sogecap are very proud of the unit-linked products we are providing in France, Europe and even North Africa. Our best unit-linked products in the “audacious” category gave over 25% over the last 18 months and the secure ones over 20 % over 18 months, and we don’t want to spoil our reputation with a product that would offer less interest. 

We want to find new channels and partnerships with banks or brokers. Our products now are not fit for brokers and we are building products that are fit for partnership with brokers.

The future of the country can give the insurance industry a lot of hope for development The Lebanese market is still cornered by laws and needs modernization. It should also concentrate a bit. If the market is modernized, it can develop very well and give a lot to the country. There is a need for more awareness on capitalization products.

The people have a need and start contracts but a number of these contracts fade out after three to four months for economic reasons. The need is larger than the economic capacity.