Bancassurance in Lebanon
AROPE and BLOM Experience
Insurance Conference-Damascus 2005
Table of Contents
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Bancassurance: Regional Trends
Lebanese Model proposal
Lebanese Insurance Market
Bancassurance in Lebanon
Arope / BLOM experience
Insurance Conference-Damascus 2005
Bancassurance: Regional Trends
Bancassurance is the distribution of
insurance
products
through
bank
channels.
 Europe discovered Bancassurance in the late 70’s
and according to a recent study conducted by
“AM Best” , significant changes are expected in
the Middle East moving over a Bancassurance
Distribution Model.
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Insurance Conference-Damascus 2005
Bancassurance: Regional Trends
Projections: Growth forecasted for Premiums in
Personal Lines insurance over the coming 3 to 5
years, mainly due to the following factors:
 Expatriate workers are prompting the development of
compulsory medical and motor insurance>>impact the
concept of insurance among locals
 Regulations Reforms that provide a comprehensive
insurance framework and open the region to foreign
investment
 Low insurance penetration rates in the region’s countries.
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Insurance Conference-Damascus 2005
Lebanese Model Proposal
 Similarities between our both insurance markets:
– Environment effects
– Cultural beliefs
– Client behavior
These similarities lead us to believe that
ultimately, the Syrian market will be developing
in a similar way to the Lebanese, especially in
the area of Bancassurance.
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Insurance Conference-Damascus 2005
Lebanese Insurance Market
Socio-demographic environment
 In 2003, Lebanon’s GDP was around $19 billion,
two-third of which came from the Services Sector
 The Lebanese Population is estimated at around
4 millions
 Two-third of the Population is in the 15-64 years
age bracket
 Life Expectancy at birth is estimated at 72 years.
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Insurance Conference-Damascus 2005
Lebanese Insurance Market
Socio-demographic Environment
 Active population constitute 40.5% of total
population, nearly 1.62 million
 83% of the active population work in the
private sector
 40%
of active population hold “white
collar” jobs.
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Insurance Conference-Damascus 2005
Lebanese Insurance Market
Market Figures
Market Premium Income
Non Life (2003)
Penetration Rate
Per Capita Density
2.1%
$95
27%
Life
Life (2003)
Penetration Rate
Per Capita Density
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Non Life
0.7%
$35
73%
Insurance Conference-Damascus 2005
Lebanese Insurance Market
Non- Life Market ( in Million USD)
$450
$381
$400
$350
$397
$342
$311
$316
1999
2000
$323
$300
$250
$200
$150
$100
$50
$0
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2001
2002
2003
Insurance Conference-Damascus 2005
2004
Lebanese Insurance Market
Life Market (in Million USD)
$200
$180
$180
$160
$139
$125
$140
$120
$100
$98
$82
$88
$80
$60
$40
$20
$0
1999
10
2000
2001
2002
2003
Insurance Conference-Damascus 2005
2004
Lebanese Insurance Market
Non-Life Density in selected countries
$1,000
$900
$891
$800
Density 2002
$700
$715
Density in Lebanon is
small by world standard
$600
$500
$400
$300
$288
$243
$200
$100
$0
$93
$5
Egypt
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$6
Syria
$25
Morocco
$35
Jordan
$117
$40
KSA
Lebanon
Kuwait
UAE
Cyprus
Insurance Conference-Damascus 2005
France
Germany
Lebanese Insurance Market
Non-Life Penetration Rate in Selected Countries
4.00%
3.70%
3.50%
This rate is the highest
among Arab Countries
penetration rate (2002)
3.00%
2.97%
2.50%
2.18%
2.00%
1.95%
2.22%
2.01%
1.50%
1.00%
0.72%
0.50%
0.41%
0.46%
0.50%
0.00%
Egypt
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KSA
Syria
Kuwait
Jordan
Morocco
Cyprus
Lebanon
Insurance Conference-Damascus 2005
France
Germany
Lebanese Insurance Market
Opportunities
 Potential for a future market growth: only
30% - 35% of the Lebanese population is
insured and awareness is growing.
 Insufficiency of NSSF and Government
participation in covering all medical needs of
population and retirement schemes.
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Insurance Conference-Damascus 2005
Lebanese Insurance Market
Opportunities
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Compulsory motor insurance (bodily injury
only) was introduced in 2003
Insurance for expatriates is also compulsory
workmen Insurance is compulsory, but not
yet in force
Introduction of new law for Public safety in
2005: Decennial for new buildings, Third
Party for elevators and Earthquake.
Insurance Conference-Damascus 2005
Bancassurance in Lebanon
Market Size
 Bancassurance operations
are estimated at
around 20% of the total Lebanese insurance
market in 2003.
 In the Life sector, premiums increased six-fold
over the period 1992-2002, with growth mainly
fueled by the introduction of Bancassurance
during the last few years
 Today, Bancassurance accounts for 31% of all
life premiums.
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Insurance Conference-Damascus 2005
Bancassurance in Lebanon
Different Business Models
 Banks with participation in Insurance Companies
 Insurance Companies fully or partially owned by
Banks
 Banks writing insurance through their fully owned
Brokerage Firms.
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Insurance Conference-Damascus 2005
Bancassurance in Lebanon
Market Facts
 47% of Lebanese banks sell insurance products
OTC
 21% of Lebanese banks work only through
affiliated insurers
 18% of banks work through independent insurers
 8%
of banks
work through both affiliated
insurers and independents insurers.
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
BLOM Bank Group
 BLOM Bank
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Network of 44 branches in Lebanon
Off-shore Banking Unit in Limassol, Cyprus
Branch in Damascus Free Zone
Branch in Amman, Jordan
 B.S.O, ‫ بنك سوريا و المهجر‬2 branches in Damascus, 1 branch in
Aleppo & 1 branch in Latakieh.
 BLOMINVEST, the group’s Investment Bank
 Banque Banorient, located in Geneva
 Banque Banorabe, H/O in Paris with branches in London,
Dubai, Sharjah
 AROPE Insurance, H/O in Beirut and 5 branches in
Lebanon
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
BLOM Bank
Largest Bank in Lebanon since 1981 till 2004
BLOM chosen as the best Bank in Lebanon by
renown international sources:
the Banker, Euromoney, Global Finance and
Capital Intelligence
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
AROPE Insurance
AROPE Insurance was established in 1974 to:
Handle BLOM’s own insurance business
Supply BLOM clients with all their Insurance needs
AROPE Positioning
 Consolidated
results based on regular growth since
1974
 Among the best: 7th rank within a
market of 56
Insurance companies .
 First Insurance company ISO certified
 Pioneer in the Bancassurance model creating a financial
“ one stop Shop” solution.
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
AROPE Financial Indicators
Year
Premiums
S/H Equity
2004
2003
2002
2001
2000
24,687,117 11,659,528
14,265,712
9,324,322
11,369,904
7,570,706
10,732,512
6,169,379
8,708,767
5,034,179
Profits
2,334,973
1,753,692
1,401,195
1,135,332
864,652
ROE
25.04%
23.16%
22.71%
22.55%
20.73%
New Decree:
 R.O.E.:
20.39%
Solvency Ratio: 45.47%
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Insurance Conference-Damascus 2005
Solvency
Ratio
47.23%
65.36%
66.59%
57.48%
57.80%
AROPE/BLOM Experience
Benefits for BLOM Bank
 New source of revenue (in tightening financial
markets)
 Leveraging existing infrastructure (network, front
office employees, IT, etc.)
 Strengthening relation with clients (continuity
insured by renewals of policies).
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
Benefits for Arope
 Using a large existing Network
 Large Existing Client-base allows for synergies in
marketing:
“A good Bank client is a good Insurance client”
 Development of Personal Line / Retail insurance
business (easy marketing via bank branches)
 Risk diversification (large number of small policies in
portfolio)
 Low operating & distribution cost
 Limited collection problems
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
Benefits for Clients
 Value-added service
 Convenience: One-Stop
financial needs
 Payment facilities
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Shop
for
Insurance Conference-Damascus 2005
all
their
AROPE/BLOM Experience
Bancassurance Operations
Direct Bancassurance : OTC products
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Motor Compulsory Bodily Injury
Motor Material Damage
Travel
Property (office and home).
Insurance Conference-Damascus 2005
AROPE/BLOM Experience
Arope Products
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
Bancassurance Operations
Indirect Bancassurance: BLOM retail products
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Retirement Plan:
Education Plan:
Car Loan:
Consumer Loan:
Home Loan:
Damanati
Waladi
Sayarati
Kardi
Darati
 Credit cards
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
BLOM Retail
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Insurance Conference-Damascus 2005
AROPE/BLOM Experience
IT Solution
Two existing models of IT solutions:
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Online: One database for both, Bank and
Insurance Company
Off-line: Separate Database
We opted for the second option for Banking
Secrecy’s sake
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Insurance Conference-Damascus 2005
.‫كلمتنا كلمة‬
Thanks for your attention !
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Insurance Conference-Damascus 2005