Aug. 17, 2016

Georges Matossian


Georges Matossian

General Manager & Vice President, Al Mashrek

"Microinsurance is an interesting segment, but it is a numbers game."


Georges Matossian is the General Manager & Vice President of Al Mashrek. He has worked for many years in the insurance sector, including a number of ever increasingly senior positions at Al Mashrek.

What is your evaluation of the insurance industry in Lebanon?

The insurance sector has been growing effectively in the past years, and at a quicker pace than most industries in Lebanon. It is undeniable that growth has slowed down in comparison to the numbers it presented a few years ago, but this responds to instability and political stagnation rather than deficiencies in the sector itself. If we look at the numbers, they are positive. They look promising, and we cannot deny that Lebanese insurance companies have found a way to remain resilient no matter how dark the panorama is. Industry wise, we have seen a steep decrease in the marine insurance segment due to the Syrian conflict, which has hindered export activity to Syria, Jordan, Iraq, and other markets. With the evaporation of this trade route and the position of Lebanon as a hub, insurance companies have lost an important part of their business in the local market.

What have been the major challenges Al Mashrek has faced, and how have you come up with innovative solutions to counter them?

We have pushed hard over the past four years to increase the percentage of collection of our premiums and to lower the deficit of collection to maintain a good client portfolio. Some of our clients have been with us for years, and paying their premiums has become increasingly tougher; therefore, we have shifted to adapt to these needs. All the international compliance regulations, such as Basel III, that have been recently applied have also taken their toll on how the sector operates; insurer banks minimize their shares in their own insurance companies, pushing them to have a more aggressive approach to the market. The fact that we are not connected to any banking institution leaves us in a more vulnerable position to counter these effects; hence, we came up with those solutions.

How has this policy of mandatory insurance from the banking sector shifted the needs of regular insurance companies?

An increasing trend in the Lebanese insurance market is the ability of banks to incorporate mandatory insurance policies into their loans, which has indirectly affected all players in the insurance sector. Due to the monetary situation, many businesses are shifting from traditional insurance to bank insurance, which is why when you look at the top-10 insurance companies they are dominated by bank insurers. We have been challenging this situation for the past few years, and have been able to maintain a fair level of the market share. We use our cash reserves to stay alive in this stagnant market. The challenge now is how much longer can we sustain this trend and remain competitive.

Al Mashrek has always been identified by its personalized customer service. How does this give you an advantage in the market?

We believe our services are good, and we have a strong level of satisfaction among out clients, and so do other insurance companies with high-quality services. However, I doubt customer service adds much to client portfolio numbers; these days, in Lebanon, most clients are looking for the cheapest option when getting a premium and do not foresee what will happen when they have a complaint or what service will they get in case they need to use their coverage. At the end of the day, we are a service company and we must offer the best services to our clients, particularly to those that are paying their premiums. We operate in a small market where public relations and connections have a major impact on a company's expansion; therfore, we cannot make mistakes when it comes to offering services. It is a burden, yes, but it is also a load we must bear in order to survive.

Many insurance companies have ventured into the microinsurance segment in order to increase their profits. Have you tried this business line?

Microinsurance is an interesting segment, but it is a numbers game. This business works in markets with more than 10 million in population and where microinsurance may be profitable. It is also highly oriented to life insurance, since this is the most profitable line of business. For us in a market the size of Lebanon, microinsurance does not represent a safe bet to increase out numbers or profits.

Have you incorporated any technological application to your product portfolio?

As a businessman with a background in technology, I can tell it is still too early to invest in technological applications for the insurance industry in Lebanon. The bulk of customers purchasing premiums in Lebanon come from the heads of families, who tend to be older and usually not involved in technological applications and novelties. Also, the implementation of mobile applications and technological advances requires a fair level of internet speed at an affordable cost, which we do not have in Lebanon for the time being. The percentage of potential customers to cater through technological applications remains too low for us to have a big incursion in this segment.

How has your venture in Egypt worked out so far?

Al Mashrek invested in a new company in Egypt called United General Insurance as a major shareholder. It has been a year since we started this operation, and it has been positive. It is a business that looks promising, and we plan to build up on it. Of course, the Egyptian market is completely different from the Lebanese market; it is a huge market with lots of potential. Microinsurance, for instance, can be successfully applied in Egypt. The major challenge we have faced so far is related to transferring money out of Egypt, but I believe this will be solved soon. Overall, our business in Egypt is growing well and I have a very positive outlook for the future of this market for Al Mashrek.

What do you see for the future of Al Mashrek in the next couple of years?

We will remain stable. We are witnessing a small growth in our business through the operations we have in Lebanon and Egypt. I do not think we will perform any expansion to other markets for the time being, and we already have enough branches to cater to the Lebanese market.