The economic backdrop of the country has been weakened by regional tumults as well as by local political and security instabilities since 2011. Key sectors of the economy such as construction, real estate and tourism have all suffered from sizeable setbacks. GDP growth is expected to hover around 0.5% in 2015 far away from the range of 8-10% witnessed back in the period 2007-2010.
The private sector has also taken a hard-hit. The BLOM Lebanon Purchasing Managers’ Index (PMI), tracking the performance of the private sector in Lebanon, reached its lowest level in fifteen months to reach 46.9 in November, below the 50-points mark separating economic expansion from economic contraction.
The Lebanese insurance sector managed to outperform other sectors of the economy. In fact, many elements play in favor of the sector in Lebanon. First, the bancassurance model is widely spread in Lebanon, whereby commercial banks are also the owners of insurance companies. The bancassurance model allows the bank-owned insurance companies to generate premiums easier by counting on its large customer network, especially since bank products such as loans often require an insurance coverage, to leverage on the fact that the customer’s trust in the bank will extend to the insurance arm. The customer also benefits from tailored, credible and convenient insurance products. Second, private insurance companies step-in with the provision of medical coverage services in the context of a precarious social security system in the country.
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Insurance Sector Kicks Off 2015 on a Good Note