Mr. Ronald Chidiac, CEO of Broktech Insurance & Reinsurance Brokers SAL, discussed, in this interview with Al Morakeb AL Ta’mini magazine, the latest updates about the insurance sector, and what could be done to improve its performance and the acceptance of the insurers to new trends.
He also talked about the achievements of his good company during 2018 away from the “competition game”.
* How can you summarize the latest changes and developments in the insurance sector globally, regionally and locally?
Globally, the insurance industry is undergoing a transition phase as the sector changes and evolves to match new requirements in terms of needs and digital technology and competition with FinTech/InsurTech. Most of the global insurance and reinsurance companies have begun to develop their technological infrastructure and business systems to remain relevant and thrive.
At the regional and local levels, great efforts have been made in recent years to develop the sector, thanks to regulatory reforms, but there is still a long way to go to cope with the rapid change in the global insurance sector. Independence, Proper Corporate Governance and Culture Change are among the most important issues to be dealt with prior to moving forward.
* Do you think the official bodies, legislative authorities and regulators are playing the required role in improving, developing and modernizing the performance of the insurance sector in your country?
The Insurance Commission is playing a major role in improving the performance of the insurance sector in Lebanon and correcting misconduct. But compared to global trends, we need to focus more on how technology can be used to improve and strengthen existing systems. Besides, we need a change of mindset to accept change and embrace it.
The rate of insurance penetration in Lebanon is one of the highest in the Arab region. Therefore, we can no longer rely solely on business growth through increased demand; we have to focus on innovation in products to create demand.
* Technology is an essential component of strengthening, growing, developing and modernizing of the insurance sector…
– How do you keep up with its development?
Before answering the question, it is important to pinpoint that technology refers to innovation and not to innovation through electronics. At Broktech, we constantly follow technological developments and strive to engineer innovative products and solutions that meet the changing needs of our clients and help them adapt to the challenges. We have already launched various initiatives to answer existing and future needs through a smart capacity approach.
* The Earth is subjected to climatic changes reflected by devastating hurricanes and storms that led to massive losses…
– How does this new reality affect the work of the insurance sector?
The year 2017 was the costliest to the insurance sector in terms of insured losses from natural disasters, which exceeded 130 billion USD.
Insurance companies and reinsurers were affected by these losses in one way or another and many companies have subsequently begun to tighten their terms and conditions; however, the effect on the global reinsurance market was not disastrous because the surplus in capacity is too large and could easily absorb such losses. What we need to look at is not the absolute amount of losses, but the amount of losses expressed as a percentage of the Gross Premium. The average ratio of Insured Losses to Global Insurance Premium is minimal except in 2011 and 2017 where it has almost doubled compared to previous years. Having said that, the amount of losses is marginal when benchmarked against premiums and so is their impact on the insurance industry.
* How does the increase in oil prices in global markets effect the insurance sector in the Arab world?
Higher oil prices usually attract investments and boost economies. Should increase in Oil prices be persistent then the insurance sector will benefit mainly at the level of large coverages such as corporate insurance and construction projects. On the contrary, if Oil prices remain low the regional economy will suffer significantly and the insurance sector will record adverse results.
* What are your company's most significant achievements in 2018? And your expectations for 2019?
We harness all our resources and capabilities to keep abreast of new developments and engineer products and solutions that meet current and future customer needs.
We worked on modeling tools for pricing and capital management solutions, in addition to new non-traditional ways of better transferring risks. In a nutshell, we can say that given the market conditions, we preferred relying on 2018 to invest in the way forward rather than destroying values in playing the “competition game” and being opportunistic.
