Compared to even the richest Arab countries, the sector penetration in Lebanon remains among the highest with an average of USD 160 per inhabitant. This implies that for sociological and sometimes religious reasons in the Arab world, the concept of insurance hasn’t been completely embraced yet by the general public.
There are around 50 companies sharing this sector which is significant number compared to the market size. Concentration is on the way however. During the 90s, the sector witnessed dozens of mergers, dozens of license withdrawals and even some bankruptcies. Now, the sector is getting gradually stabilized – maybe too gradually since many of these companies are only intermediaries for re-insurers.
Insurance has been well regulated, having become obligatory and general pursuant to specific agreements with big world players in this field: GE Frankona, Swiss Re, Munich Re... Local insurers associated with foreign presence are more significant than in the banking sector with the French leading the way: AGF (Allianz group), Axa, Scor, Sogecap, Predica, Assurances Banque Populaire… There are also American players like American Life (AIG Group) along with some regional companies (Arab Life, Medgulf…).
On the other hand dozens of Lebanese companies enjoy a noteworthy presence in regional markets, a presence sometimes difficult to set up because legally it is difficult to get established in those markets. For example, some have a presence in Bahrain in order to serve the Saudi market without really being there. There is only one example that shows overseas regional expansion (towards Europe) because a main unit was established decades ago in France (the MEPA group) whereas another group, Libano-Suisse, is expanding towards French Africa. In this context, the merger of banking-insurance paved the way for several partnerships. A dozen insurance companies are owned by banks and their insurance policies are being sold over the counters of the country’s big banks pursuant to partnership agreements. All this is done despite the fact that legislations haven’t thoroughly adapted to this commercial form.
Medical Insurance represents the most important share with respect to turnover at around 40% of non life insurance. Even if it is not cheap, it is sometimes essential in a country where only half the population enjoys health coverage from the government or mutual insurances. This area has well developed and has acquired an optimal degree of professionalism. Some organizations are managing medical insurance companies (working for the account of insurers and sometimes mutual insurances) and leading the way is MedNet, which is considered a reference point and is exporting its know-how overseas. Also, the large deficit of the governmental system in terms of management and coverage favors the development of several types of insurances and activities.
Life Insurance is another example with its 2 types: death-disability and life-retirement insurance. The latter has witnessed an unprecedented development in the course of the past few years again due to the deficit of the governmental system called “end of service compensation”. This sub sector is highly concentrated with around 70% of premiums held by 5 companies (the above mentioned foreign companies).
Car Insurance became obligatory a few years ago and yet only for body injuries caused to third parties. An extension of the coverage for material damages is currently under study.
The other forms of insurance (fire, various risks) are developing at a slower pace and remain linked to circumstances. For example, the volume of ‘all risk workplace insurance’ depends on the fluctuation of the Buildings and Public Works activity as per the seasons. There are no significant figures for sea and air insurance (too heavy to be undertaken by local companies) or even war and agricultural insurances (too risky) or credit insurance.
Despite all these impediments, we still believe inside the sector and within the circle of specialized economists, that there will be a two-digit evolution of insurance premiums. We also believe there will be a more important regional expansion with the expected opening of several markets, provided that Lebanese insurers succeed in reaching a substantial size in their basic market...because the entry ticket into any neighboring country including Syria is becoming more and more expensive.
