Like other sectors and institutions in Lebanon, insurance companies are suffering from the repercussions of the economic crisis, the collapse of the national currency, and the multiple exchange rates between the official one set by the Central Bank of Lebanon and the prevailing effective market rate, which is the rate in the parallel market or currency exchange shops. This situation prevents the full receipt of funds from the policyholder's side and places insurance companies in a position where they cannot pay the dues to reinsurers, leading to the closure of many companies in addition to existing disputes with policyholders.
In a conversation with "Sky News Arabia," the president of the Association of Insurance Companies, Eli Nasnas, stated that the problems faced by insurance companies are similar to those suffered by other sectors, the most prominent of which is the holding of funds in banks due to an unannounced "capital control," which prevents them from transferring the amounts owed to reinsurers. Additionally, the inflated costs of repairing vehicles after accidents or hospital bills raise the financial obligations for insurance companies. The multiplicity of exchange rates has also made it difficult to determine the price of insurance policies to align with the purchasing power of policyholders.
According to Nasnas, there are 50 insurance companies in Lebanon employing about 4,000 employees, while the number of insured individuals in the healthcare sector amounts to 750,000. Furthermore, commenting on the dispute regarding compensation payments for those affected by the Beirut port explosion, Nasnas clarified that no definitive solution has been reached to date. Thus, insurance companies are awaiting the judicial decision that will specify the nature of the explosion—whether it is a war act that would only compensate the insured against war-related incidents or an accidental incident that would cover the resulting damages, depending on the type of policy the client purchased and the nature of the events it covers.
Nasnas pointed out that some insurance companies have paid for minor accidents an amount ranging from $25,000 to $50,000, with a portion of this amount paid in cash. The total amount paid reaches $120 million out of an extensive damage cost of $1.2 billion, accounting for about 12% of the total amount.
For his part, insurance expert Suleiman Habika explained to "Sky News Arabia" the nature of the relationship between insurance companies, reinsurers, and insured clients. He clarified that the insured party has no direct concern with the relationship between the insurance company and the reinsurers. Regarding reinsurance payments in cash dollars, insurance companies do pay reinsurers in cash dollars. As for the insured clients, any accident they encounter is covered according to the currency agreed upon during the insurance contract—if the insurance is in Lebanese pounds, payments are made in Lebanese pounds; if the contract is in dollars, payments are made in dollars.
According to Habika, insurance companies today are unable to pay the full dues to reinsurers due to the lira's collapse and the inability of policyholders to pay the insurance premiums in US dollars, leading to a decrease in the number of reinsurers interested in the Lebanese market. Regarding the issues between hospitals and insurance companies, he noted that hospitals demand insurance companies to pay their dues in cash dollars and manipulate the hospital invoice every time the exchange rate changes, whereas they continue to pay their dues like salaries according to the official exchange rate of 1,500 lira, which has now escalated to 3,900 lira.
