Rain or Shine

Since the 1990s, Lebanon’s insurance industry has enjoyed impressive growth, expanding to become a key piece of the Lebanese economy. The market is overseen by the Insurance Control Commission (ICC), a regulatory agency that operates under the auspices of the Ministry of Economy and Trade.

According to a survey conducted by Byblos Bank, total life and non-life premiums grew by 4.3% in 2016, reaching USD1.6 billion in 2016 and besting 2015’s 3.5% growth rate. The country’s insurance penetration rate stands at approximately 3.08%, and the 10-biggest insurers in Lebanon represented nearly 64% of the life and non-life insurance market, while the top 20 accounted for 86.3%. In terms of total premiums, the three largest insurers in the combined non-life and life segment were Allianz SNA (USD131.1 million), MetLife ALICO (USD122.6 million), and Bankers (USD117.5 million). Life insurance accounted for approximately 31.6% of the premiums in Lebanon in 2016. 2017 growth forecasts from the ICC estimate that gross written premiums in the life insurance category will reach 4.2% YoY growth, while gross written premiums for non-life insurance will reach 6.4% YoY growth. The largest types of non-life insurance by gross premiums are medical (42%), motor vehicle (33%), property (10%), and transport (3%), according to Bankmed.

According to the Middle East Insurance Review, the Lebanese life insurance market has recorded impressive growth in recent years, and total life insurance premiums reached almost USD505 million in 2016. In 2014 and 2015, total premiums grew by 5.5 and 6.2%, respectively, while 2016 growth hit 7.1%. Analysts are confident that growth in 2017 will be similarly robust. MetLife ALICO is the country’s market leader, commanding nearly USD87.3 million in premiums, or nearly 17.3% of market share. Bancassurance comes in second with premiums totaling USD76 million, or 15.1% of the market; Allianz SNA is third with USD67.5 million, or 13.4%; ADIR is fourth with USD45.3 million, or 9%; and LIA is fifth with USD44.2 million, or 8.7%. The rest of the market is shared by 27 other providers of varying sizes and regional specialization.

On average, life insurance firms generated premiums of USD15.3 million, while non-life insurers generated premiums worth USD24.3 million in 2016. However, the main players dominate the marketplace, accounting for the vast majority of premiums. In recent years, the top-five providers have remained relatively stable in terms of market share, accounting for 63.5% of the market in 2016, 63.7% of the market in 2015, and 62.8% of the market in 2014. However, the market has been growing, and stable market share has meant an increased premium pool, with the top-five insurers accounting for USD278.5 million in 2014, USD300 million in 2015, and USD320.3 million in 2016. The top-10 providers of life insurance in Lebanon account for 87.1% of the premiums in the country, and the top-20 firms account for 97.8% of the premiums. 19 of Lebanon’s 33 life insurance providers recorded premium increases in 2016: nine firms had single-digit growth, nine had double-digit growth, and one had triple-digit growth. Additionally, 12 insurers recorded premiums decreases and two firms had no change in recorded premiums.

There are currently 52 insurance firms in the country, and the Economy Ministry of Lebanon has pushed for consolidation in the insurance industry, arguing that a less factionalized and diffused system will enhance efficiencies in the marketplace. The ministry hopes to stimulate mergers in the industry by offering a slate of incentives, including subsidized loans, and ministry and industry stakeholders are confident that consolidation will spur competitiveness in the industry, allowing companies to raise capital more readily. This will then allow insurance providers to offer an enhanced basket of product and services to the Lebanese market. In an exclusive interview with TBY, Joseph Khawam, CEO of Securite Assurance, expressed his hopes for what the new government oversight can accomplish. “We need to make sure that we provide the proper infrastructure, rules, regulations, and conduct to grow this market,“ said Khawam. “What is also important is to create rules to help insurance companies grow by using technology and work in a way to further business.“

The profusion of insurance firms in Lebanon has not, however, been all bad, and one of the main benefits of having so many companies operating in the space is an ability to introduce new products quickly and test them in the market. Micro-insurance products and cyber security projects have been two particularly fruitful areas of innovation, and smaller firms have been able to design and bring to market new products with much faster turnaround time then their larger and more conventional competitors.

The ministry also recently announced new rules that bar mutual funds from selling insurance products to the public. This decision was enacted to curtail a growing practice of mutual funds developing and selling, either directly or indirectly, insurance products that offer coverage beyond the legally recognized and sanctioned purview of their operations.

Medical Health Insurance

Medical health insurance is a major component of the overall Lebanese insurance market. With a highly privatized health system in Lebanon, many citizens rely on some form of heath insurance to help defray the cost of care. Medical health insurance accounts for an impressive 42% of the non-life insurance premiums in Lebanon. While the market is well serviced, industry observers still believe that there is plenty of room for new growth. In an exclusive interview with TBY, Walid Hallassou, General Manager of GlobeMed, explained the potential he sees in the market, noting that there are “still some untapped opportunities.“ According to Hallassou, nearly 70% of the premium base comes from the Beirut and Mount Lebanon area, leaving open a huge untapped market in the more rural areas of the country. “Currently, this segment must rely either on the Ministry of Health, local municipalities, or NGOs for health coverage,“ said Hallassou. “Of course, with that comes many challenges that can be turned into opportunities.“ As private health insurers in Lebanon work to expand their market share, the rural areas of the country are poised to play an ever greater role in their strategy.

According to Bankmed, a growing awareness regarding the value of health insurance and a general increase in the affluence of Lebanese society has generated sustained growth in medical insurance across Lebanon. Between 2015 and 2016, medical health insurance grew 7.1% from USD458.7 million to USD 491.1 million. Analysts expect the value of the market to eclipse USD526 million in 2017, representing YoY growth of over 7% yet again.