A legacy of proper supervision

Sits down with Walid Genadry to discuss development of Lebanon’s insurance industry

Whilst the Lebanese insurance sector is quietly perched on the edge of new opportunities, such as insuring a yet-to-be-established oil industry, it currently faces a severe destabilization risk. The lack of a commissioner has disrupted the key and evolving process of supervision, and there may be concerns over who will fill the position and how. Insurance industry luminaries are reluctant to go on record to comment on the situation, but word from some of the brightest companies is that they are concerned about a vacuum in the leadership of the Insurance Control Commission after the contract of ICC head Walid Genadry was not renewed earlier this year. The ICC commissioner of 13 years left office in May without anyone appointed to replace him at time of writing.

Sitting down with Executive for a review of the challenges and achievements during his time in office, Genadry declined to discuss the relationship between politics and insurance under the tenure of various ministers of economy and trade over the years. He was, however, unequivocal on the need to decouple insurance supervision from political risks and interests. He argues that the ICC has matured to the point where it needs to be removed from the embrace of the Ministry of Economy and Trade and established as an independent regulatory entity. He further adds that the post of the commissioner needs to be shielded from becoming a trophy job for individuals with political connections.

“As long as the supervisory authority depends on a political position holder it is still too easy to inflict damages on the institution,” Genadry says. “It needs to have independence and if the culture in the political realm is such that real independence will not be granted then the best form of independence would [entail] positioning the ICC in [the] vicinity of the central bank.”

Over recent years, experiences with the establishment and the operations of independent regulatory entities in Lebanon suggest that the independence of supervisors and regulators is still treated ambiguously in the political realm. However, the Lebanese system’s precarious political processes and partisan structures make it prohibitive to operate regulatory bodies under the tutelage of a minister. Indeed there have been no fewer than eight ministers of economy in office since 2000, and the period has also seen persistent legislative paralysis. In these circumstances, for Genadry, the independence of an entity such as the ICC can be possible by institutional affiliation with Banque du Liban, the country’s most reliable and non-political public financial authority.

An even graver danger for insurance supervision would be politicized competitions for the position of insurance commissioner. The post has recently become more attractive, being viewed less as a serious mission and more as a nice position offering prestige and financial reward, Genadry says. “It is going to open the doors of hell if this position gets politicized and you start seeing this or that influential figure battling to get his man the job,” he continues. Three year mandates for insurance supervisors would not provide enough time for political appointees to learn and manage the complexities of the role, he adds.“Also, if the post becomes a political appointment, the team under the commissioner will become demotivated. It is the team that counts the most in the work of the ICC – you have to have those people motivated to stay.”

AN INSTITUTION RAISED FROM IGNOMINY

One can make the case that the current spectre of the insurance authority’s politicization would have been unimaginable without the work that Genadry and the ICC team have done over the past 13 years.

In the early 2000s, the Lebanese insurance industry was far from being a perfect machine. Although a hopelessly