Lebanon is the undisputed pioneer of the insurance industry in the MENA region, with a local sector that has stood strong for over 75 years. Lebanon created an insurance business on its own when most Gulf states had not yet been founded. The Lebanese insurance industry has proven resilient even through dark times and continues to grow steadily YoY. The last report from the Insurance Control Commission (ICC) reported a growth of 4.3% for life insurance lines and 4.1% for non-life ones, outperforming almost every other sector of the Lebanese economy amid a complex economic context the country has been experiencing over the past four years.
However, in light of the oversaturation the insurance sector experiences—a market of around 4.5 million people with gross premiums that amount to USD1.5 billion among 50 companies—most players in the industry have sought innovative opportunities to maintain their position in one of the most competitive markets in the MENA region. In that regard, microinsurance is increasingly becoming the next big thing in Lebanon, and some local companies have already ventured into this business.
Microinsurance is a protection designed for low-income people to cover specific risks and is characterized by low premiums and low coverage, but is regulated under the general principles of the insurance industry. Microinsurance is business-sensitive since it presents low risks, makes up for an increase in the shares of life insurance, and represents an additional source of revenue for insurance companies during economic downturns. At the same time, it is also customer-sensitive since it offers affordable coverage, sells through well-trusted channels, and creates value for clients with income limitations, especially in traditionally uncovered sectors such as agriculture, unskilled labor, young professionals, and temporary foreign workers.
The MENA region currently ranks second in microinsurance penetration, being surpassed only by the Asia Pacific region, and this sector is growing bigger among international and local players in the MENA market. Even though Lebanon was one of the first countries to implement it, with the first incursion in 1997 through the Agricultural Mutual Fund, its growth in the industry has faded in comparison to other regional markets such as Egypt and Jordan, where microinsurance has become an expansion strategy for most players in those markets. Nevertheless, the unparalleled creativity of Lebanese companies has put microinsurance on the map, with innovative ideas such as Arope Insurance’s Allo Hayete, a microinsurance app for mobile phones that allows users to access cheaper insurance policies, or AXA Middle East’s MobiLife, a new product that can be purchased on mobile devices by those who do not have an existing coverage.
According to Fateh Bekdache, Vice Chairman and General Manager for Arope Insurance, microinsurance offers “an opportunity for people who cannot afford a traditional life insurance package, with coverage that goes up to USD3,000,” which comes in handy during the adverse economic times Lebanon is currently going through. In an exclusive interview with TBY, Bekdache also stated, “These amounts are too high for MANY people living on a tight salary, or even for expats living in Lebanon who plan to go back to their countries at some point.” On the other hand, Elie Nasnas, Director General for AXA Middle East, told TBY, “We target the micro-insurance market by raising awareness of the importance of life insurance.”
For the particular case of the players in the Lebanese insurance industry, microinsurance also offers an open door to increase their shares in the life insurance segment, which has traditionally fallen down to motor and medical lines. Max Zaccar, President of the Association of Lebanese Insurance Companies (ACAL) told TBY, “People are realizing the benefits of insurance coverage and they are moving in the right direction. It will fall on the new generation to evaluate and promote the value of having life and pension insurance coverage.” In other words, microinsurance has its full potential yet to be discovered in the land of the cedar.