Economy and Trade Minister Bassel Fuleihan warned insurance companies operating in Lebanon that the ministry will revoke the licenses of any insurer that fails to raise its capital to at least $1.5 million by the end of June 2001 in compliance with a new insurance reform law.
Parliament approved the law last year stipulating that all insurance firms must raise their capital to at least $1.5 million by June of this year and set aside a further $1.5 million in reserves. According to the Insurance Control Commission, 47 insurers have already raised their capital and another 10 are in the process of doing so. He expressed confidence that all insurance firms will abide by the requirements. Mr. Fuleihan indicated that the ministry will propose tax incentives on life insurance premiums in order to increase savings and encourage.
It also plans to propose reducing tax insurance fees on exported and imported commodities. He said the Cabinet plans to submit to Parliament a bill that would introduce mandatory car insurance. Mr. Fuleihan said Lebanon needs an efficient insurance market to protect policyholder rights and to generate enough funds for long-term investment in the country, which would contribute to the development of the economy and its capital markets. He noted that although premiums have been rising at an average annual growth of 12 percent since 1997 and consolidated equity is well above 10 percent of aggregate premium, the sector is till considered small at $390 million.
Also, insurance penetration in Lebanon is still modest despite the sector’s growth over the past five years in stature and strength. The total premium-to-GDP ratio averaged a modest 2.3 percent for the 1995-99 period compared to 8-12 percent in developed countries, and premium-per-capita in 1999 amounted to $98, which places Lebanon well below the high levels of insurance density present in mature markets that could go up to $4,500 per capita. Total non-life premiums reached $315.45 million in 2000. — ( Lebanon Invest )
© 2001 Mena Report (www.menareport.com)