|Draft law will strengthen insurance sector (Daily Star)
|Hamade says New Legislation should help make country regional hub.
Reform will bring the industry up to date with modern standards of regulation and increase confidence in the country's financial institutions
Trade and Economy Minister Marwan Hamade unveiled a modern insurance draft law, which promises to put Lebanon on a solid footing for the healthy development of the insurance industry for years to come.
The event was held at the UN Economic and Social Commission for Western Asia (ESCWA) headquarters in Beirut on Friday.
"Our goal is to make Lebanon a leading regional hub for the insurance sector," Hamade said during the announcement of the Union of Arab Insurance's Silver Jubilee conference, titled "Arab Insurance: A Future Outlook," which will be held in Beirut from May 10 to 12. "The implementation of the latest legislation and internationally applied standards will ensure our objective, in addition to offering better protection for consumers."
"We expect over 1,000 delegates from 40 countries to be present," said Abraham Matossian, president of the Association of Lebanese Insurance Companies. "The future of the insurance sector in the Middle East in the wake of international developments will be the focus of the various industry experts, including delegates from Swiss Re and Munich Re, two of the world's biggest insurers."
Matossian said he considered the scheduling of the event in Beirut for the second time since 1992 to be "exceptional," adding that it demonstrated Lebanon's leading role in the sector, despite the destructive civil war that followed the golden era of the 60s and early 70s."The Lebanese draft law is a model for the region and for emerging markets around the world," Hamade said. "The proposed legal framework draws on cutting-edge concepts from developed countries, but does so in a way that recognizes the size of the industry and the nature of the Lebanese insurance environment."
For example, he said, a number of key provisions, regarded as fundamental to a modern insurance regime, will be "phased in" over a period of years, enabling local companies to avoid disruption and carefully adapt to the new approaches.
And, while the draft law is based on what are recognized to be the most advanced legal principles for insurance supervision, the Lebanon version is greatly simplified compared to developed countries with much larger and more mature insurance industries.
"While the draft law is a modern approach and concise in format, all of the concepts have been successfully demonstrated in a wide variety of countries and insurance environments," he added.
"Lebanon, a member of the International Association of Insurance Supervisors (IAIS) in Basle, Switzerland, will conform to the new 2003 IAIS approved core principles," Matossian said. "The draft law sets out a comprehensive framework for the insurance industry and the protection of the public, from the perspective of both insurer solvency and consumer protection."
The principles include organization, corporate governance, insurer licensing requirements, investments, coverage, auditor and actuary requirements, mergers and acquisitions, agents and brokers regulation, supervisory intervention, and remedial powers and sanctions."As members of the insurance industry are well aware, many of the above are not dealt with at all by the present insurance law," Matossian admitted. "Or they fall short of a modern and comprehensive approach designed to ensure a healthy and vibrant industry, capable of providing a wide variety of products for protection and investment."
According to Matossian, the draft law constructs an insurance supervisory model for Lebanon that incorporates the core principles of the IAIS.
"Some industry members will undoubtedly argue against the provisions of the draft law and there is no doubt that constructive and useful comments can be made," Hamade said. "Other countries have adopted these provisions, and in doing so, have strengthened themselves and public confidence in the financial fabric of their countries."
Ara Alain Arzoumanian
The Daily Star