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Bancassurance in Lebanon AROPE and BLOM Experience

Bancassurance in Lebanon AROPE and BLOM Experience. Table of Contents. Bancassurance: Regional Trends Lebanese Model proposal Lebanese Insurance Market Bancassurance in Lebanon Arope / BLOM experience. Bancassurance: Regional Trends.

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Bancassurance in Lebanon AROPE and BLOM Experience

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  1. Bancassurance in LebanonAROPE and BLOM Experience

  2. Table of Contents • Bancassurance: Regional Trends • Lebanese Model proposal • Lebanese Insurance Market • Bancassurance in Lebanon • Arope / BLOM experience

  3. 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.

  4. 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.

  5. 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.

  6. Lebanese Insurance MarketSocio-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 72years.

  7. Lebanese Insurance MarketSocio-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.

  8. Lebanese Insurance MarketMarket Figures Non Life (2003) Penetration Rate 2.1% Per Capita Density $95 Life (2003) Penetration Rate 0.7% Per Capita Density $35

  9. Lebanese Insurance Market Non- Life Market ( in Million USD)

  10. Lebanese Insurance MarketLife Market (in Million USD)

  11. Lebanese Insurance Market Non-Life Density in selected countries Density in Lebanon is small by world standard

  12. Lebanese Insurance MarketNon-Life Penetration Rate in Selected Countries This rate is the highest among Arab Countries

  13. Lebanese Insurance MarketOpportunities • 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 populationand retirement schemes.

  14. Lebanese Insurance MarketOpportunities • 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.

  15. Bancassurance in LebanonMarket 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.

  16. 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.

  17. 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.

  18. AROPE/BLOM ExperienceBLOM Bank Group • BLOM Bank • 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 المهجر 2 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

  19. AROPE/BLOM ExperienceBLOM 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

  20. AROPE/BLOM ExperienceAROPE Insurance 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. • AROPE Insurance was established in 1974 to: • Handle BLOM’s own insurance business • Supply BLOM clients with all their Insurance needs

  21. AROPE/BLOM Experience AROPE Financial Indicators • New Decree: • R.O.E.: 20.39% • Solvency Ratio: 45.47%

  22. AROPE/BLOM ExperienceBenefits for BLOM Bank • New source of revenue (in tightening financial markets) • Leveraging existing infrastructure (network, front office employees, IT, etc.) • Strengthening relation with clients (continuityinsured by renewals of policies).

  23. 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

  24. AROPE/BLOM ExperienceBenefits for Clients • Value-added service • Convenience: One-Stop Shop for all their financial needs • Payment facilities

  25. AROPE/BLOM Experience Bancassurance Operations Direct Bancassurance : OTC products • Motor Compulsory Bodily Injury • Motor Material Damage • Travel • Property (office and home).

  26. AROPE/BLOM ExperienceArope Products

  27. AROPE/BLOM Experience Bancassurance Operations Indirect Bancassurance: BLOM retail products • Retirement Plan: Damanati • Education Plan: Waladi • Car Loan: Sayarati • Consumer Loan : Kardi • Home Loan: Darati • Credit cards

  28. AROPE/BLOM Experience BLOM Retail

  29. AROPE/BLOM Experience IT Solution Two existing models of IT solutions: • Online: One database for both, Bank and Insurance Company • Off-line: Separate Database We opted for the second option for Banking Secrecy’s sake

  30. كلمتنا كلمة. Thanks for your attention !

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