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French Version

Maritime insurance falls victim to Iraq war - business slumps almost 35 percent (Daily Star)

Premiums on ships heading to Gulf have surged since outbreak of Maritime insurance in Lebanon has fallen victim to the war in Iraq, with business slumping almost 35 percent, said Insurance Association in Lebanon vice-president Fateh Bekdache.

He added that all the insurance premiums on ships heading to the Gulf have surged since the outbreak of fighting.“We got guidelines in March not to insure any cargo heading to Kuwait or other Gulf states,” Bekdache told the Daily Star.

Bekdache, who is also the general manager of Arope Insurance company, said maritime insurance makes up less than 10 percent of the entire insurance market in Lebanon.“We do not have official statistics on the size of maritime insurance in Lebanon, but we believe the percentage is not that high,” he said, adding that for his company, maritime insurance represents about 5 percent of total business. Despite its small size, the business has been struck hard by the war. “Many of our customers who deal with Iraq are deeply concerned about the impact of war on their business,” he said.

Lebanese industrialists claim the volume of business with Iraq is about $400 million. However, the Finance Ministry has said that trade with Iraq doesn’t exceed $70 million a year, and that Iraq represents about 7 percent of Lebanon’s total trade volume with the rest of the world.

Lebanon’s total exports reached $900 million last year. Bekdache said the size and number of letters of credit for merchants trading with Iraq have also fallen significantly. But he stressed that the other insurance policies in the country had not been affected by the hostilities. Following the Sept. 11, 2001 attacks against the United States, prices of all insurance policies rose to alarming levels, affecting business worldwide.

Bekdache added that all goods coming to the Gulf will have to pay high premiums. But he warned that if the re-insurance companies decided to raise their premiums, Lebanon will feel the effect. Insurance firms are hoping the war in Iraq will end fast to contain further losses.

Industrialists and merchants are concerned about the future of their businesses in Iraq if the regime in Baghdad is changed.“If the war ends in a short time, the losses of insurance industry can be contained,” Bekdache said. He added that those insurance companies in Lebanon that specialize entirely in maritime insurance would be the hardest hit.“These companies have surely suffered losses from the war in Iraq,” he said.

Bekdache also said the war came at a bad time for Lebanon.“We are already going through difficult economic conditions and some of the clients may prefer not to renew their insurance policies until the conflict is over.” He added that some of the companies that have group insurance for their staff may also delay renewing the policies.

The total premiums for the entire insurance sector in Lebanon in 2002 rose by 6 percent to $342.3 million. But Bekdache expressed optimism that the insurance sector would recover the losses once mandatory car insurance becomes law on Saturday, saying the sector’s revenues “will surely rise.”

The long-awaited mandatory car insurance will become effective as of Saturday, according to Insurance Association in Lebanon vice-president Fateh Bekdache. The minimum car insurance coverage will cost LL65,000 and the maximum LL90,000.

All car owners must at the least obtain third-party car insurance before the deadline. According to unofficial figures, about 20 percent of the 1.5 million cars in Lebanon are covered by insurance while only 1 million are on record with the Vehicle Registration Department.

Bekdache said the Interior Ministry will not register any car unless it is covered by insurance. The Economy Ministry is expected to make a decision on car insurance in the coming two days, with a memo to be issued by Saturday.

Bekdache said the new mandatory car insurance will also cover body injury.“This is good news for the insurance sector which has been passing through a difficult condition,” he said. Bekdache added that the insurance premiums from mandatory car insurance is expected to jump by $35 million to $40 million a year.

Beirut 07-04-2003
Osama Habib
The Daily Star

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