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Jordan and Lebanon Insurance Report 2011
Business Monitor International, Nov 2010, Pages: 62
The Jordan and Lebanon Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Jordan and Lebanon's insurance industry.
The positions of the Jordanian and Lebanese insurance sectors have not changed much over the last two years or so. Both are archetypal Middle Eastern markets. In absolute terms, they are small markets. Non-life insurance is underdeveloped in terms of penetration (premiums as a percentage of GDP). Life premiums per capita are miniscule (although, to be fair to the protagonists in Lebanon’s life sector, they are considerably higher than in most countries in the region). Continued development especially in non-life insurance has ensured that the global financial crisis of late 2008 has had little impact.
As is the case in most Middle Eastern markets, we are looking for double-digit annual growth in both Jordan and Lebanon through the 2009-14 forecast period. In contrast with much of Central and Eastern Europe, the global financial crisis had very little impact on the development of insurance in either country through 2008-09.
In the case of Jordan, total premiums in 2010 amounted to JOD400mn. This includes JOD362mn in non-life premiums and JOD38mn in life premiums. In 2015, the corresponding figures should be JOD697mn, JOD602mn and JOD95mn. In terms of the key drivers that underpin our forecasts, we are looking for non-life penetration to rise from 2.14% of GDP in 2010 to 2.40% in 2015. We are looking for life density to increase from US$8.14 per capita to US$18.64. Mainly because of the small absolute size of the Jordanian insurance sector, BMI’s Insurance Business Environment Rating (BER) is, at 43.3, fairly low.
On the basis of figures published by the insurers’ trade association in relation to 2007, and various press and corporate reports since then, we confidently estimate that total premiums in Lebanon amounted to LBP1,898,054mn in 2010. This includes non-life premiums of LBP1,296,062mn and life premiums of LBP601,992mn. In 2015, the corresponding figures should be LBP3,148,614mn, LBP2,106,300mn and LBP1,042,314mn. In terms of the key drivers, we expect non-life penetration to remain unchanged from 2.40% of GDP through to 2015: meanwhile, life density should increase from US$95.28 per capita to US$155.63. BMI’s Insurance BER for Lebanon is 44.6.
In theory, the insurance sectors of both Jordan and Lebanon should be ripe for consolidation. Both countries are open to foreign insurers: ALICO, formerly the life subsidiary of AIG – but now of MetLife – has long had a presence in each of them. Chartis, AIG’s global non-life operation, is present in Lebanon. In both countries, the industries are extraordinarily fragmented. There are dozens of insurers that are local operations, affiliated with banks or conglomerates, and which are small by almost any standard. In this respect, Jordan and Lebanon have much in common with the UAE.
In practice, both insurance sectors will probably remain fragmented. In contrast to Central and Eastern Europe, another part of the world where national markets are quite homogeneous, underdeveloped (in most cases) and likely to be small in 2014, there is little evidence that major insurers perceive the Middle East in general, and Jordan and Lebanon in particular, as opportunities that are too important to miss. (We note that, even in Central and Eastern Europe, a number of multi-national players have been rethinking their commitment. Even if the multi-nationals did want to enter, there are no former state monopolies with market shares of 30% or more that they could buy.
Further, the motivations of the owners and managers of the small local insurance companies vary. In some cases, such as MedGulf and Arabia Insurance, local businesses have made progress in building a regional footprint across the Middle East. By world standards, these companies may not yet have achieved economies of scale: however they are not constrained by the limited opportunities in Jordan and/or Lebanon.
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