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French Version

Covered : Lebanon's insurance sector grows

Non life premiums reached $426.4 million in 2005

The non life premiums of Lebanon's insurance sector achieved a growth of 7.4 percent to $426.4 million in 2005 compared to $397 million in 2004, according to an annual survey from Al-Bayan magazine.

Life insurance was not included in the survey. But despite the improvement, brokers say Lebanon has the potential to achieve a higher per capita insurance coverage and should be on the same level as leading emerging markets.

The insurance sector, which undergoing a number of reforms, is not contributing significantly to Gross Domestic Product growth of the country.

The survey covered 50 insurance firms providing non life insurance, of which two posted triple digit growth rates and 13 registered double digit growth rate in non life premiums.

The survey indicated marketing non life insurance products through commercial banks, or bancassurance, has clearly yielded benefits to insurers.

Some insurance companies complain that is very difficult to compete with banks that offer insurance coverage.

They added that banks oblige their clients who borrow money to take an insurance coverage from the bank.

Some of the factors of growth for such firms, according to the study, were mandatory car insurance which was implemented four year ago by the Economy Ministry. Large health insurance contracts and bidding for public ports' insurance contracts also helped to the growth of the sector.

"The 7.4 percent growth in premiums in 2005 despite the adverse economic and political conditions that prevailed during much of the year, suggests the relative resilience of the insurance sector in Lebanon," the survey said.

All Lebanese insurance firms have successfully raised their minimum paid capital to $1.5 million as requested by the Economy Ministry four years ago.

However, experts say that many of small insurance firms cannot expand in the future or cover all their clients due to small cash reserves.

MEDGULF maintained its market lead with $60.2 million in non life premiums in 2005, equivalent to a 14.1 percent market share and up by 8.3 percent from $55.6 million in 2004.

It was followed by Bankers with about $45 million, AXA Middle East with $27.5 million, SNA with $23.4 million and Libano Suisse with $23.3 million as the top five non life insurance providers.

All of the 10 top insurers posted increases in their premiums.

Cumberland reported the biggest year on year rise among the10 top insurers at 39.9 percent.

The 10 top insurers controlled 62.3 percent of the non life market share in 2005 compared to 61 percent in 2004.

"The number of insurance firms in Lebanon must drop from 65 to not more than 25 at the most. There is not enough room for everyone as the market is too small," once source said.

Beirut 03-04-2006
Osama Habib
The Daily Star

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