Excelling Under Extreme Conditions

Read Full Magazine Here. Lebanon continues to grapple with an acute economic and financial crisis that has impoverished most of the population since 2019. Tensions have increased along the Lebanon-Israel border, where armed clashes between the Israeli army and various Lebanese and Palestinian armed groups have been ongoing for a long time. By mismanaging the electricity sector for decades, Lebanese authorities massively failed to uphold the right to electricity, which Human Rights Watch found is essential to the right to an adequate standard of living. Lebanon’s failure to provide electricity beyond a few hours per day left people in the dark and dramatically reduced their access to critical rights, such as food, water, education, and health care.

AL MASHREK Insurance & Reinsurance SAL is well known as one of the leading insurance companies in the Levant and North Africa for its presence and service for the past 51 years. Since 1983, Al Mashrek Insurance has been recognized for its diverse insurance services and solutions. Through providing distinguished services in the field of insurance, utilizing strategic partnerships with a multitude of clients and suppliers, and encompassing career opportunities for thousands of employees, Al Mashrek Insurance has assumed a leading role in the field of insurance in the Lebanese market. This role is supported by the strong bond Between Al Mashrek Insurance and Insurance agents and brokers.

Through providing distinguished services in the field of insurance, utilizing strategic partnerships with a multitude of clients and suppliers, and encompassing career opportunities for thousands of employees, Al Mashreq Insurance has assumed a leading role in the field of insurance in various markets, a role supported by the strong bond built with Al Mashreq Insurance agents.

Reinforced by agents and company branches working in ever-developing strategies, Al Mashreq Insurance has succeeded in becoming an epitome of client-oriented services.

Besides talent and work ethics, a key factor to Georges Abraham Matossian’s accomplishment has been his durability throughout his career. It is the strategy that can generate the most sustainable growth since it uses existing assets and capabilities of the core organization. After his education in the United States, Georges Matossian has long been recognized for his leadership and advocacy as he was mentored by his famed father, Abraham Matossian. Since his return from the United States, he has seen many changes and witnessed remarkable fluctuations in the insurance industry. In addition to serving as General Manager & Vice President of Al Mashrek Insurance & Reinsurance SAL, Georges Matossian is well known throughout the country as an enterprising businessman. Following more than 19 years of insurance experience, Matossian’s target is to use his knowledge and experience for the benefit of the industry. He is also determined to go on with plans in a timely fashion.

Georges Abraham Matossian, Vice Chairman & Member of Board Al Mashrek Insurance & Reinsurance Sal sat down for a wide-ranging exclusive cover interview detailing his insights on the insurance and reinsurance industry amidst economic turmoil and technological advancements, with BUSINESS LIFE at his office in Antelias – Antelias Rabieh Main Road, Lebanon – Al Mashrek Building.

Read the full BUSINESS LIFE cover interview.

 

 

BL: Georges, amidst the problems that we are facing nowadays in Lebanon, being economical or political, all people are looking forward to securing their health insurance. As efforts to build emergency-ready health systems intensify across the globe, Strategic Investment for Health System Resilience provides a practical investment framework and a diverse set of country cases to inform decision-making and strategic resource allocations. What’s the risk reduction for promoting such an emergency-ready primary health care, public health, prevention, and community in Lebanon?

Georges A. Matossian: After the 2019 financial crisis and the freeze of foreign currency accounts in the Lebanese banks, the devaluation of the Lebanese Pound and the evaporation of National Health Care funds the Lebanese population rushed to buy health care coverage from both insurance companies and mutual funds,  the insurance industry and specifically the health insurance line was hard hit the financial crisis followed by the Beirut port explosion due to lack of purchasing power from the existing customers, who jointly lowered their insurance coverage to reduce their annual expenses as the access to hard foreign currency was difficult, thus the portfolio decreased by at least 30%. At the same time people who were solely dependent on the national health scheme and as they were without coverage rushed to buy medical insurance from the providers, however many were left without any coverage as either they couldn’t afford the cost or had surpassed the maximum age of adherence, Thus, they had to go elsewhere like the mutual fund companies, there is still remains a large number of the population that are without coverage. So, the Lebanese market during this financial crisis is quite more complex than other markets.  Although health care providers are pushing to increase their costs to abide by the normal annual inflation and the price of medication which in turn is increasing year on year, we are still managing to keep our premiums at the same rate of the previous year, just to avoid adding a heavy burden on our clients in these dire circumstances, and in the meantime we are always in discussion trying to find amicable solutions with hospitals and health care providers just to protect the interests of the clients and the interests of both the insurance industry, doctors and the health  care providers.

 

Georges A. Matossian: Our country has been through wars and unrest since the 70’s. We were born during the war, and we are still living in an unstable country for the last 45 or 50 years. As for the insurance industry in this situation, it is protected by its market leaders who have quite a wide experience in such situations.

The war cover is not affected by the situation for clients who have bought the coverage prior to the escalation of the situation; they have their coverage up and running. But to attract new adherents in these circumstances it is almost impossible for a simple reason, if the coverage exists for low risk regions, it is quoted at a sky high rate which is deemed uneconomical. So, for clients who have bought the coverage, of course, the insurance industry is ready to cover, bearing in mind that all the war risk policies are placed fully in foreign reinsurance companies. Accordingly, there shouldn’t be an issue, to cover the claims, if any.

 

Georges A. Matossian: Technology is the hottest subject worldwide. These days, everything is linked to technology and technology is shifting from partial human intervention to the full artificial intelligence scheme. We cannot but adapt to the new technological trends, or the change in the daily work cycle. Bearing in mind that I personally support to keep the human intervention active, as it has an added value. Surely, the artificial intelligence can help in mass production workflows,  like data entry, data evaluation etc… but for the insurance industry, there are cases where the human intervention is impossible to cancel, especially in underwriting and claims handling. It’s quite difficult to automate the full process. Now, we saw something very unusual lately in Lebanon, which I find very interesting for what I would expect to come in the future, regarding the insurance industry, which is the latest explosion that was done in Beirut with the Pagers and the walkie-talkies used by Hezbollah members, which exploded across Lebanon and Syria. This is a game-changer. Already, airlines sent alerts that all pagers or talkie-walkies are not allowed on the commercial flights. And, from what I read and heard on the news, is that the new tech that they used in the explosive material that they put in these apparatus is not detectable by the available x-rays at the airports and so on. Meaning that, this technology could be an unforeseen or uncalculated high risk on board any flight, because it can be integrated in any device that are allowed to be carried on board flights like cell phones or laptops, even tablets. Thus, I assume that soon enough, reinsurers will come up with new exclusion to such risks, it’s going to be, as I said, a game-changer in the insurance coverage of the airline business. So tech is good, but only when used in the right place and to limited extent.

 

Georges A. Matossian: Insurance, of course, will exist in its current form or with partial AI intervention, however; this intervention will cause a shrinkage or replace part of the workforce in the industry and In the positive sense it will diminish the human error margins and speed up many processes.

 

Georges A. Matossian: The insurance industry is always evolving, technological innovations are being used for packaged or pre-defined policies that are sold over-the-counter and that can be bought through e-commerce. The successful e-commerce platforms are linked to an AI system that generates the policy instantly without any human intervention. This has already started, and we expect it to grow in the future, affecting all markets worldwide. However, custom-made policies cannot be 100% covered by AI. As I mentioned before, there are risks where human intervention is crucial and necessary.

 

Georges A. Matossian: One cannot predict what the future upholds, but with the trend of technological advancement that we are encountering, I can expect that in the near future insurance practitioners are going to diminish drastically and remaining will have a lot spare time work on new strategies and perform that tasks that require human interaction.

 

Georges A. Matossian: Robots already exist, and now they are creating humanoids—robots that look like humans, with skin and everything. However, I am unsure how positive this will be or if it will be implemented for use by normal people and companies, or if it will be restricted to military or government projects. For companies, I think it is still too early to discuss replacing humans with robots, as I consider it unorthodox in a country with high rate of unemployment.

 

Georges A. Matossian: After the crisis, we saw significant development, especially in non-government organizations and industries. Lebanese people are survivors, and we reduced our expenses to cater to our liabilities. Other industries, like traders, also reduced their size of import as they are now financed out of pocket, diminishing turnovers but striving to survive. The government is in rehabilitation mode, trying to re-establish entities and revive what was lost due to the financial crisis and the devaluation of the Lebanese pound by over 98% by February 2023. They are also trying to revive the health scheme and other government entities. It will take time, but hope that in the next five years, we will fully recover.

 

Georges A. Matossian: The industry is developing because insurance follows all new and existing risks in all other industries. However, the world is facing high rates of inflation which is not translated similarly in the gross income which is in turn diminishing the purchasing power among clients the world. Some countries, like Saudi Arabia and the UAE, have a positive outlook due to their development schemes and rigid oil wealth. We expect to see similar developments in Lebanon and the region. The future outlook is positive, despite the latest escalation that we are experiencing.

 

Georges A. Matossian: In the past three years, even during the crisis, we expanded our network in Lebanon, by opening new branches in Nabatiyeh and Batroun. We see growth in the insurance market and count on government reforms. The main one being the compulsory motor insurance policies for both material damage and bodily injury, passed by parliament in 2016 or 2017 but not yet implemented. We expect real estate reconstruction to boost in the South and parts of Beirut affected by the current conflict, additionally, the declaration of oil and gas in Lebanese waters suggests a positive future outlook for Lebanon and all its industries including the insurance industry.

 

Georges A. Matossian: We are in the last quarter of 2024, and we have seen a 7% growth, which is good given the current financial, political, and economic environment. For 2025, with the ongoing conflict between Israel and Lebanon, our expectations are not very high. However, if things calm down, Lebanon will revive quickly, and we could see further growth, especially in the engineering and health lines of business due to high demand for health insurance.

 

Georges A. Matossian: Motor insurance will not change unless the law is implemented or the Ministry of Interior regulates car checkups and road tax inspections, requiring an insurance policy for renewal. However with our current situation, we are discussing increasing the premium of compulsory motor insurance for bodily injury to what it was in 2018, around $50 per vehicle to supersede with the increase in the cost of health care that is drastically affecting the related claims. For the energy industry, we are waiting for Total’s excavation reports. Once Lebanon becomes an oil-producing country, the country’s financial situation will change, and we will become part of the Oil Producing Countries. Currently, energy policies must be issued by a Lebanese registered company, but we lack the necessary licenses and qualified personnel. Most energy-related policies are placed 100% abroad, except for traditional policies.

 

Georges A. Matossian: Given our negative financial and political situation, our regulations are acceptable for our market. We cannot compare an unstable country to stable ones. Most neighboring countries are stable and updating their regulations to cope with the ever changing market evolution. In Lebanon, passing new regulations is difficult, and more regulation would burden insurance companies. Despite several crises’, including the Beirut port explosion, our regulation scheme is acceptable. Many new laws have been presented to parliament nut not yet passed or implemented by parliament.

 

Georges A. Matossian: An interesting topic not often discussed in Lebanon is the coverage of electric motors, now available worldwide. We are seeing many electric vehicles, especially from the Chinese brands, in Lebanon. These vehicles are not made for Lebanon, due to lack of electricity and unmaintained roads noting that we lack information in regards to the exact repair costs, lifetime of the batteries, or depreciation scale of such vehicles. We are insuring these cars but are still in the dark about many unknowns. We always look to European markets for more information, experience and statistics.

 

Georges A. Matossian: Comparing Lebanon to Venezuela, our financial crisis is similar or even worse. Despite this, we have not seen extreme uncontrollable situations like in Venezuela. Corruption exists everywhere, and we are currently experiencing low-scale corruption. Government employees lost significant income due to devaluation, leading to bribes or commissions to complete simple jobs. We hope for a more organized, regularized, and transparent future with less corruption than what we have experienced in the past.

 

Georges A. Matossian: The American elections have no impact on Lebanon or the region. The U.S. foreign policy remains the same regardless of the president. The effect of the new U.S. president is primarily on the U.S. itself.

 

Georges A. Matossian: Since the Ta’if Accords, the presidency in Lebanon is symbolic with limited power. The seats are assigned based on religion, and I believe switching positions every four or six years could be beneficial. The president’s role does not have a significant impact, unless there is a change in the constitution.

 

Georges A. Matossian: The current war’s impact on the insurance industry affects mainly the premium collection. We do not expect a significant impact on claims, as most policies do not cover war-related claims. Only a small part of our clientele have war coverage, and they live between Beirut and the North. The South does not have war coverage, so we do not foresee a major effect on the industry or financial statements as such.