The life insurance market in Lebanon is estimated to have declined by 7% in 2018, weakened by lower new business and little activity on mortgage and personal loans, according to Ms Nadine Habbal, the acting head of the Insurance Control Commission of Lebanon, which is the sector's regulatory authority.
In the non-life sector, motor insurance business is estimated to have decreased by 4% because of lower new business, while property and casualty insurance business is estimated to have dipped by 1.7% last year.
The stagnation in property and casualty lines is directly correlated with the economic situation in the country, affected by regional geopolitical turmoil. The economy sees little activity in terms of new projects, transportation, and other similar activities, said Ms Habbal in an article published in Executive Magazine last month.
The downtrend in the abovementioned business lines is juxtaposed with an important expected 16.1% growth for medical insurance, triggered by an anticipated increase in the number of persons insured following the recent implementation of a decision pertaining to the guaranteed renewability of medical insurance products.
As such, the expected gross written premiums in 2018 should reach $465m for life insurance, $365m for motor, $560m for medical, and $270m for property and casualty lines, for a sector total of around $1.66bn, representing still a growth of 1.2% when compared with 2017.
Mitigating the challenging economic conditions requires increased focus on innovation in products, services, and operations. The sector has yet to show marked commitment to innovation, as initiatives though serious are sparse.
Digitalisation is still largely lagging. It needs to be considered at different levels of the insurance operations, from distribution to financial reporting, said Ms Habbal. Embarking on this path will undoubtedly foster significant improvements to core administration systems, enhance data quality and enable advanced pricing and risk management techniques to be deployed.
In addition, good governance and transparency play a major role in this proposed scenario, as they provide the guarantee that an institutionalised and rigorous approach to capacity building and innovation can be deployed. In other circumstances, shareholders would be highly reluctant to provide the support needed to boost innovation through digitalisation or other creative ideas.
The ICC is progressively deploying a framework that would help the sector to pursue new avenues. The rollout of this framework started several years ago with enhanced reporting transparency through annual report statistics, providing stakeholders with an enriched perspective on what is going on with the sector. Risk-based capital would be the next major step, reinforcing the financial condition, and establishing a scientific context within which insurers would have to manage their underwriting, investment, and credit strategies to reach an optimal setup.