Lebanese Republic 
Statement issued by Minister of Economy: Increase the insurance brokers’ guarantees in order to enhance the solvency and protect the insured’ rights
Statement issued by Minister of Economy: Increase the insurance brokers’ guarantees in order to enhance the solvency and protect the insured’ rights
As part of the continuous efforts to reactivate and organize the insurance sector and to enhance its efficiency; and as follow-up to the series of procedures and circulars made by the Minister of Economy and Trade, Dr. Amer Bisat to update the sector’ regulating rules and enhance its transparency and professionalism, the Ministry of Economy and Trade issued, last week, a decision aiming to enhance the insurance brokers’ financial solvency and protect the insured’ rights.
To this end, the decision states that the value of the insurance guarantees should increase to 20 thousand US dollars, being the accredited level before the crisis; provided to be increased gradually to 50 thousand US dollars during three years according to a clear timetable. This decision shall be immediately applied to all new brokers while the current ones shall be given a grace period of six months to comply with its requirements.
It is to mention that imposing a minimum capital requirement constitutes a cornerstone in the management of a well-regulated and efficient insurance sector , thus guaranteeing that the insurance brokers have the necessary financial capacity to fulfill their obligations and provide the insured with an effective protection. Moreover, these guarantees contribute in enhancing professionalism and market-based discipline in addition to reducing systemic risks and building trust in the insurance sector through restricting the process to brokers enjoying the sufficient financial solvency and the capacity to fulfill their obligations.
The increasing of the guarantees’ value is part of a broader effort to restore the insurance sector’ solvency and credibility as a whole. In parallel, the Ministry is currently working on preparing a comprehensive project to reconsider the requirements of the capital adequacy for the insurance companies, to be completed during the few coming months.
In this regard, Minister Bisat emphasizes that the increasing of the guarantees’ value is not an arbitral or unilateral decision, however it was the result of deep discussions over two sessions within the Insurance Control Commission, with the participation of representatives of the insurance brokers and the insurance sector. In addition, the decision was discussed in detail with the Lebanese Insurance Brokers Syndicate where their remarks were taken into consideration, namely regarding the guarantee’ value and its implementation timetable. In parallel, and in view of the challenges confronting the banking sector, the Ministry is working, in cooperation with the brokers and their representatives, to find secure methods to deposit these guarantees.
Above all, this decision falls under the State responsibility to protect the citizens’ rights and its refusal to submit to the status quo. The main aim consists in protecting the insured, building trust in the insurance sector and prohibiting any practices that may endanger their rights, while stressing that the citizen’ interest remains above all.
At the end, Minister Bisat stressed that the Ministry of Economy and Trade will continue to take all necessary measures to improve the regulation of the insurance sector and protect the insured’ rights , stating that the Ministry will stand firm on all reforms serving the public interest despite the pressures.
