Insurance in all forms is a never ending investment, we all need to consider regardless of our means or age. Today AL MASHREK, with its far reaching commitment to insurance development, boasts of more than 140 employees spread over 12 diversified branches throughout Lebanon, in addition to its joint venture company in Egypt.
The founders of Al MASHREK have big hopes and ambition to expand furthermore but they are waiting for the right timing because George Matossian, General Manager - Vice President of Al Mashrek Insurance & Reinsurance Company believes that every great idea needs to be seized in a moment otherwise the idea and the moment are both lost. He therefore, developed a “bottom line approach” in business management with quick decision making even on the most complex issues involving big investments. AL MASHREK has emerged as one of the soundest insurance groups in the private sector in Lebanon.
Both brothers, Alexandre Matossian, who serves as Chairman of the Board & CEO of AL MASHREK insurance & reinsurance Group, and George Matossian are keen to adhere to Abraham Matossian's heritage and business plan but at the same time they are breaking new ground through expanding their company's operations and presence abroad.
The Matossian group strives to add value to this noble industry by improving people’s quality of life through providing highly efficient risk transfer mechanisms at affordable cost.
BUSINESS LIFE reporter spotted George Matossian during the GAIF 2016 event to discuss at great length the worries of Lebanon's insurance players, Lebanon's regulatory benefits and drawbacks and AL MASHREK's vision.
Photo Caption: George Matossian, General Manager - Vice President of Al Mashrek Insurance & Reinsurance Company
BL: George, the General Arab Insurance Federation (GAIF) - was held lately in Lebanon despite all challenges, what are you heartfelt reflections and criticisms?
George Matossian: In 2004, Lebanon held a fantastic GAIF conference. The GAIF 2016 conference took place in difficult economic and social circumstances. Moreover, we did not have much time to prepare and organize as we had in 2004 due to some minor issues within the Association des Compagnies d'Assurances au Liban (ACAL), which were linked to ACAL's presidential elections. Consequently, we prepared for the GAIF conference in less than a one-year period. In fact, we had higher expectations regarding the number of delegates that were supposed to attend the conference, but unfortunately due to certain political security matters in the area, we had a lower number of participants than expected though the number of registered participants was close to 1300 participants.
It was a big shame that some people linked politics to economy and business. Thus, there was a good number of potential participants from the Gulf countries that refrained from participating due to some political issues between Saudi Arabia and Lebanon, which I heard that there was a discussion to solve the issue two days prior to the launch of the conference. No doubt, it would have been more successful to have the Gulf countries participate in this General Arab Insurance Federation especially that the GAIF represents all member Arab countries. When you have an Arab country that is not present, it means there is a lack in the presence of those countries and those markets even their absence affected some reinsurers who refrained from participating because most of the GCC insurance companies abstained from travelling to Lebanon.
However, everybody noticed that we have changed the way the GAIF was organized in the past years. The GAIF was always based on speeches and some side meetings. We noticed that most of the past participants were more interested in conducting side meetings because it is becoming irrelevant to spend time to sit in a conference halls as most speeches are available after each conference in digital format. There's no denying that technology has touched and transformed every aspect of the event and meeting industry in the past few years, the world has become so much smaller that the news and speeches can go around very quickly to any country in the world and to any person through emails or any other form of communication. Thus, we decided to create a larger than usual meeting area in Zaitunay Bay to accommodate the side meetings and, effectively, we had around 38 tents of different sizes that were rented by companies where they held their business meetings during the three days. Both the organizers and the participants found this change to be extremely successful. Of course, there are small issues that were forgotten which should have been taken care of. But, as it is the first time that we hold such type of an event, it is evident that some mistakes will occur which we will certainly avoid in our future conferences and meetings.
Thus, all in all, I see that the GAIF in Lebanon was very successful and I believe it would have been more successful with the presence of all the Arab countries because they are the members of GAIF! So, we hope that in the future, we will avoid mixing politics with economy just to keep our Arab economies expanding and independent for the benefit of all.
BL: Are you satisfied with the achieved results?
George Matossian: I am 85% satisfied because I did not have the time to do something better. I am the General Manager - Vice President of a company with 12 branches and not to forget that we have just started an operation in Egypt which needs also our full attention, help and support. The GAIF was a profound responsibility. In 2004, I took care of most of the back office work with my father's coaching as it was my first time doing such event. But, it was extremely successful because I had the time to follow up all the aspects of the organization. Now, I did not have enough time!
It was successful, but I have a different view from that of participants. I see the mistakes, which not everyone can pinpoint. Some issues were linked to new regulations that were imposed in Beirut. So, there were some bumps that we had to cross which were not present in 2004, which made the job harder.
BL: What is the biggest obstacle that you had to overcome this time?
George Matossian: The biggest bump that I had to overcome was the Zaitunay Bay. To hold our meeting areas in the Zaitunay Bay where we placed the tents, I had to hold many meetings together with Jamil Harb and Asaad Mirza to be able to get the approval to place the tents in Zaitunay Bay because the area where we installed the tents is not administered by Zaytouna Bay alone, it is, also, linked to Solidere and Beirut Municipality. Subsequently, we had to take the approval from three different parties after explaining to them the motive and the history of the GAIF conference and our plans for the area. We had to have their permission for every single part of the organization process. This was not an easy task but we crossed it and we succeeded.
BL: Wissam Zahabi, Chairman of Lebanese Petroleum Administration delivered a speech on "The Future of the Lebanese Oil & Gas Industry for Arab Insurers" during the GAIF conference, what is your opinion as an insurer?
George Matossian: Although, I was not present during this session, but we did an oil and Gas conference in Lebanon last year. AS an insurer, I would hope that all insurers in the market join hands in creating a pool to cover the risks of oil and gas exploitation in Lebanon. But, this is not enough because definitely, we need the support of our government. The government must support and come up with a new law that obliges the concerned parties to insure through Lebanese companies. Otherwise, we would be wasting our time because these are international companies who can place the risk under a global umbrella policy. We are a small country with limited capacity. Everybody knows that oil and gas covers require extremely large capacities. Such capacity is above our capabilities. I am sure, we can take a very small share, since the exploration is in the Lebanese waters and we are registered Lebanese companies who have paid their dues and obligations to their government and we have our capital invested in Lebanon.
Additionally, we are present to serve in Lebanon. It would be sound that all the risks pass through a pool of Lebanese companies for oil and Gas. I am sincerely hoping that we receive the required backup from our government at least for this time and specifically for this project.
Without the support of our government we will be left out with the Workmen's Compensation Insurance. Let us wait and see but still better to say "Let us not be content to wait and see what will happen, but let us have the determination to make the right things happen."
BL: George, since more than 95% of the participants of GAIF 2016 admit that GAIF's Lebanon was a great success, are you considering holding another conference in 2017 or 2016?
George Matossian: I will talk about the success and people's opinions. I believe that people's opinion is a bit biased because they are comparing the GAIF in Beirut to previous GAIFs that were held in different Arab countries. I believe such comparison is unfair. Why? Because, the hospitality service and its cost, that we have in Lebanon with all due respect is not available in any other country. Plus the weather that we have is much more comforting for such an outdoor event. It is true that they have much bigger conference halls and much bigger land to accommodate bigger number of participants but they do not have the expertise to provide an equivalent service, which we take into consideration in the success of our conferences. It makes the organization process much easier and faster. I am sure that the organizers of previous conferences worked very hard to serve and accommodate the big number of participants. It was not easy but they did it and they succeeded. That is why partcipants views are a bit biased. It has been decided that the GAIF 2018 will be held in Tunis.
I am sure that Tunis is a beautiful country from what I have heard. I am sure that they can do an excellent job in GAIF 2018. ACAL and myself are more than ready if needed to be of assistance in GAIF 2018 because at the end of the day, this is a conference for the interest of all Arab countries. So, with unity, we are much stronger and produce better outcomes.
BL: What is missing in the Lebanese insurance industry?
George Matossian: As you know, we have a vacant position in the Ministry of Economy especially that Walid Genadry’s contract ended in 2015 as head of the Insurance Supervisory Authority and until now we have no replacement.
Thus, some laws that were in the pipeline, are now put on hold. Currently, we are unable to pass any new laws through the government and through the Ministry of Economy. I am not going to tell you that things will get better over night. It is a period, which I hope will end soon. We are trying to make the best out of this period until we have a new government and a new parliament where at least we can apply for new laws that can take effect and ameliorate the regulations, which in turn will be profitable for all concerned parties and the future of our market.
The most important issue is linked to the new Traffic Law, which states that all cars should have a compulsory third party material damage insurance coverage. We have held several meetings to discuss the rating to apply taking into consideration the experience we have with the compulsory bodily injury policy since 2003. Where we couldn’t apply any ammendments or changes to the terms and conditions of the policy. Hence, it took us some time to put together the relevant terms and conditions for this new compulsory policy that are to be discussed with the concerned ministries.
The New Traffic Law has been enforced for almost a year, and we haven’t finalized or agreed on the new compulsory policy. This is one part. The second part is related to the many harsh court decisions linked to death claims caused by road accidents meaning that, in the past two years some judgments obliged companies to pay around two hundred thousand dollars as indemnity. It is true that a person’s life cannot be replaced by money, but we have to follow International practice, which will allow us or the actuaries to calculate the relevant risk premium. We are trying to avoid the flaws that are present in the bodily injury policy which is priced at $50 since 2003, whereas the claim amounts have been increasing relevantly for the past 13 years due to an increase in medical costs and court rulings. In my opinion, we will reach to the day where insurance companies will seize from issuing compulsory third party bodily injury policies, as it will be non-profitable.
Another issue is that we do our studies based on all the registered cars in Lebanon. And, with the absence of the government's help to impose and follow up on people that are not insured, we therefore have around 20-30 % of the vehicles that are uninsured in Lebanon and this number is increasing with time. It is true that for every registered new car, you need to have a compulsory insurance policy, but as no one is checking, the old cars are not doing the annual Vehicle inspection and eventually they are not buying insurance. The main problem behind this is that in our part of the world, people believe that insurance is a luxury; it is not considered a necessity until they get a claim that affects their savings. Even if one has the means, it is much cheaper for a person or entity to buy insurance than to self-insure. I think, we are trying to do many awareness campaigns to advise people that they should buy insurance.
We live in an area, where you do not know if the government is capable to support you. You do not have anybody but your insurer. Lately, we are seeing many people dying in front hospital doors, as hospitals have limited their number of beds dedicated to social security covered clients, which is considered shameful and unhuman, those persons believe that they cannot afford to buy health insurance coverage but have never asked, and I believe they can afford it. Instead of having a cell phone and paying its monthly bills, which is not a necessity as much as insurance, we can buy health insurance for one year and this insurance can save our lives, save our family and save our belongings.
BL: Why should people stay at risk?
George Matossian: Even if we do statistics on how many persons insure their house which is one of their main or first investment, we find that more than 50 % do not insure their houses unless if it is imposed by the bank. People do not think of buying insurance at the least for fire or earthquake risks.
Internationally, motor insurance and property insurance are obligatory. It is true that medical insurance is obligatory in some Arab countries but, they are having the same problem that we are having in the compulsory motor insurance. The premiums are not enough to cover the companies' operational cost and claims.
BL: What is the solution to medical insurance?
George Matossian: Compulsory Health insurance results and terms can be ameliorated with the help and support of governments, which should regulate and control the charges imposed by hospitals, medical suppliers and doctors. If they can control these three factors, you can have a compulsory medical insurance that is affordable to all. It is unfortunate, but with the current situation we have to increase our medical premiums every year to balance with the increase in the medical bill.
BL: What about life insurance?
George Matossian: It is true that most of Arab countries have increasing their portfolio in life insurance because it is the most profitable branch of insurance. They are doing this to cover losses in other branches of insurance, basically, in motor and medical. Plus, lately, in the Arab countries, property insurance has been hit very hard from floods and fires that occurred in the region. So, they are rushing to create new products in life insurance.
People are linking life insurance to financial products, which is not part of insurer’s expertise. There are financial institutions like banks and investment companies that perform these tasks. I believe this needs the support of financial regulators to control and regulate these products to protect their citizen’s interest.
BL: How active is this line of insurance at Al- Mashrek?
George Matossian: We used to have a universal life insurance, which we stopped two years back. I decided to stop it because it is not our profession. We were selling these products to grow our life portfolio. So, we stopped it for the time being. We may reactivate it, but with the support of financial institution that are specialized in investments.
With all the problems that we are facing in the region, I hope that this critical period just passes by safely in order to have more stable and prosperous markets, which in turn affects the economy in the whole region.
