Brokers are likely
to benefit most
The Central Bank (BDL) has instructed banks and financial institutions not to engage in insurance or reinsurance activities or market and advertise insurance contracts.
Insurance companies owned by banks can continue their business operations as usual but they cannot market their deals through the banks.
BDL said that the banks and financial institutions are also prohibited from allowing representatives of insurance companies to have a work space on their premises.
A number of banks are providing space to these representatives in their own work locations. Some banks are also advertising insurance contracts through various mass media and social media, according to the notification.
The Code of Money and Credit does not allow banks to be involved in activities other than banking. Advertising insurance and reinsurance deals is confined by law to insurance companies, brokers, and entities licensed by the Ministry of Economy and Trade.
Elie Hanna, Chairman of the Lebanese Insurance Brokers Syndicate, said: “We have been asking the Central Bank for more than ten years to put an end to this unlawful practice. Many banks were forcing insurance policies on their customers and the conditions stipulated in their policies were ambiguous and didn’t really serve the best interests of customers." He said that the banks have a 20 to 25 percent market share in the insurance sector.
Max Zaccar, Chairman of the Association of Insurance Companies in Lebanon, said that brokers will benefit the most as the BDL decision will have an impact on the distribution of insurance policies, not on the issuance of insurance policies. Each of the insurance companies is likely to keep its market share, but those which are not owned by banks might expand their share a little as bank customers will be free to select their own insurers, according to Zaccar.
Reported by Shikrallah Nakhoul
Date Posted: Jan 11, 2018