The global insurance and reinsurance market are totally affected by Covid-19. In global countries, we can feel the difference. In Lebanon, it’s more difficult regarding the devastating economic crisis that occurred over the past months. Moreover, the Beirut explosion of 4th August 2020, made a huge impact on all Lebanese sectors including the insurance industry.
To know more about the coverage of insurance to the victims of Beirut Blast and the reinsurers attitude, the magazine ”Ta’amine wa Masaref” interviewed the CEO of Premium Broking House Mr. Georges Bitar.
Q: A difficult year has passed on all economic sectors generally and on the insurance sector especially. It’s not only because of the Covid-19 that immobilized the movements, implementing new health measures avoiding this deadly epidemic and also in consequence of Beirut blast in 4th of August. What is the tails reflected on insurance sector totally and on the reinsurance brokers that Premium Broking House is a part of?
A. Certainly, the year 2020 has been a very difficult year for the whole world as a result of the Covid-19 Pandemic and will certainly make its mark on humanity for the 21st century; nevertheless, on Lebanon it is more severe in view of the disastrous explosion of the Beirut Port that had a strong mark on the history of the Lebanon and very devastating to the Lebanese, for which we hope the recovery would be shorter time that it requires.
As far as the reflect on the Insurance industry is concerned and as our business emanates from the MENA region African and Europe, the COVID-19 immediate effect is probably not as devastating as the other industries are; however, we believe the wave of devastation on the other industries will reach our industry after around 1 year and therefore, we believe the year 2021 will be a devastating year for the insurance sector in general. As regards the Insurance industry for Lebanon, the financial and economic crisis that started prior to the arrival of the COVID-19 Pandemic is making things much more difficult than any other nation and we are wondering how all these disasters coming to in just a short time can be overcome and if so, how much time needed to come back to stability.
Q: After this, the horizon of the next year is blurry. Some sees that a breakthrough must appear in Next June with the discovery of a vaccine to this epidemic with the cooperation between the United State and Germany. Some are pessimist and thinks that this vaccine will not affect generally next year. This if it gives good results. They are also afraid of new epidemics like Scientifics says and may be worse than Covid-19. From which side are you? Do you feel optimistic about future days?
A: The discovery of the vaccine or let us say several vaccines is certainly long awaited to help the needed patients and save lives; however, the damages that occurred on the world economy is very devastating and the effect we are seeing in the western developed countries a very high number of SME’s bankruptcies that would make people lose jobs or a substantial reduction on their income. The future on the long run should certainly be ok, however the short coming future (3 to 5 years) would certainly be very difficult unfortunately.
Q: All insurance experts combines that 2020 was bad regarding the incomes and also the gains especially after the Beirut explosion. What was the situation of Premium Broking House through this year that will end in one month?
A: We were very lucky that we had an excellent beginning of the year 2020, as we acquired several large contracts that helped us reach almost 50% of our last year’s revenues; however, for Q2 & Q3 our target was to keep our renewal business running as smooth as possible and as Q4 showed a good hardening market and therefore, higher revenues for us. We are optimistic to close our 2020 year with a surprisingly slight increase from last year’s.
Q: How are you dealing with your clients affected by Beirut Port explosion?
A: Well, as we are a purely Reinsurance Consultants, our clients as you know are the Insurance companies and for our clients in Lebanon, we believe we did a great job in helping our cedants and in coordinating between them and our Reinsurers in firstly assisting in appointing the correct loss adjusters. We tried to provide full transparency to Reinsurers on the details of the situation on the ground and had several meetings with our cedants together with the appointed loss adjusters with full transparency as well.
Q: The ancient minister Mouhamad Choucair has accused the insurance companies to not dealing with the reinsurance companies. This is why she refused to pay off its obligations to its clients. From the other side the insurance companies denied this. What do you think about this and do you think that the international companies can pay off before the official report regarding Beirut Blast?
A: It is very disappointing from Mr. Choucair to attack the Lebanese insurance companies, when the Lebanese Insurance Companies assisted the Lebanese tremendously during this difficult times and still do, contrary to other financial sectors in the Lebanon; The Lebanese insurance companies were getting paid their insurance premium in Lebanese pounds whether on the medical insurance or on the motor insurance to say the least and certainly the motor and medical claims were irrelevant to the premium of the insurance policies. Besides, has anybody asked how the Lebanese Insurance companies paid their reinsurance premium to their Reinsurers, when all their money are blocked in their banks?! Perhaps Mr. Choucair doesn’t have any idea about the fact that most of the Lebanese Insurance Companies very competent and have 95% reinsurance support and therefore, his attack on the Lebanese Insurance industry is totally irrelevant and unfair!
On the other hand, Reinsurers are unable to pay the claims dues to Lebanese Insurance Companies. Prior to the verdict on the cause of the explosion is decided by the Lebanese courts. However, as the tension mounts on the Reinsurers to settle their dues to local insurance companies, they have decided proceed doing so, however, on the condition that in case the verdict on the cause of the explosion was not Fire related and therefore, Terrorism or war for instance, the insurance companies should return the money back to Reinsurance companies and this would certainly out the local insurance companies in a very difficult situation.
Q: The Brokers in general and the reinsurance brokers especially are they affected with Covid-19 ramifications and by Beirut Explosion?
A: As advised above, we believe Reinsurance Brokers are being effected due to the COVID-19 ramification in terms of mobility and accessibility in the same way like any other industry or any other company. However, in general they were in fact not being tremendously effected economically at this stage, but rather we believe the effect will be tremendously effected next year in 2021.
Q: The high exchange rate of the dollar and dealing still with the official rate for the insurance policies made confusion in the sector especially that the insurance companies and the clients weren’t satisfied because the process of repairing the car wasn’t as expected. This retreated on the medical program and others programs also. How Premium Broking House dealt with this reality?
A: As we are purely Reinsurance Brokers, we were not completely effected in that respect. However, we strongly believe the Insurance Companies did a tremendous job in keeping themselves standing in the storm, assisting their clients in the best way they can during this crisis and certainly trying to maintain their excellent relationship with their clients as well as trying to satisfy their reinsurers and pay them their due premium on time and avoid risking cancellation of their coverage.