WALID GENADRY Q&A
Based on your experience of 13 years in the position, what are your recommendations for the next head of the Insurance Control Commission and for the work of the ICC going forward?
I would tell the new commissioner that one cannot regulate insurance, and at the same time be either a close friend, or an adversary, to any insurer. The commissioner has a role to regulate and supervise insurance. Because of this requirement, the commissioner has to keep a distance, because at any time they might have to penalize someone. The commissioner also has to exercise their role fairly. This is very important not just because of the principle of fairness but also because we are in a very small country. It is a country where the whole sector will know within 48 hours if you make a decision that could be considered in the slightest way debatable. You need to keep the reputation of the commission intact.
What does this mean with respect to issues or requests that are presented through political channels?
You cannot be unfair. An insurer may have political connections but you cannot give the impression that some insurers can obtain favors and others can’t. Giving favors would destroy supervision. Would you go to see a World Cup game and pay hundreds of dollars for a ticket if you knew that the referee prefered one football team over the other? The second very important thing is that the commissioner has to act with appropriateness and integrity, knowing that they are a controlled controller.
In what sense and controlled by who?
The insurers are not the only ones to be observed and controlled. When the commissioner does something wrong, they intervene, complain and affect change. Respect for the institution is important and must be earned. So the commissioner is controlled, first by the insurers and then by the brokers and other actors that deal with the sector, which could be lawyers or anyone else who is helping brokers and insurers. The commissioner is also controlled by his minister, as complaints about the commissioner go directly to him. Some complaints, when properly assessed, are a positive thing for the supervisor, as they prove that he is doing his work. Finally, the commissioner is also controlled and observed by certain people inside and outside the ministry, some of whom have nothing to do with insurance, and who do not necessarily like one another. This means that if the commissioner is perceived as doing a favor to one interested person or group, all the others will go against them. They have no leeway to make a mistake. Being a referee is a thankless task; that is the way it is designed. The other thing I would tell the commissioner is that they are working within a very weak legislative framework and this means that they have very little leeway to be flexible.
How is that?
You would like at times to be flexible and push a company or an actor in the right direction but at the same time be understanding. But how flexible can you be on something that is already very weak? If you are flexible under those conditions, it means you are not supervising, and that is one of the problems of a weak legislation. Unfortunately, their role is not to be flexible. There are a few other things that I would say. We are not auditors, we are risk assessors. This means we have to look at a company as if we were general managers of it. We are not in the job of penalizing, we are in the job of deterring, and penalizing is a tool to catch attention. Ninetynine percent of success is in what insurers refrain from doing by the mere fact of the supervisor’s authority deterring them from violations. This is why supervisory authority is at the heart of everything.
What is your recommendation for the insurance companies?
They should put a lot of focus on governance. This doesn’t come from the state; it has to come from them. Governance is about everything. Secondly, companies in the sector should work on their products and even on the annexed services that are attached to the products to become more sophisticated. Third, companies should merge, because the game is becoming regional. There should be mergers but it takes a new law to help with mergers. to the freezing of legislative initiatives in Parliament. “If I today have one regret, it is that we couldn’t pass the law because in the absence of this law, Lebanon is presently at the bottom of legislative frameworks for insurance in the Middle East,” Genadry says.
According to him, the current law is insufficient on many counts and even acts as a barrier against crucially needed developments. It limits options in support of mergers and insurance industry consolidation, and does not allow the regulator to impose any new corporate governance requirements on insurance companies.
It appears to be a comfort to Genadry that a World Bank assessment of the Lebanese insurance sector highlighted how the ICC has been able to achieve very respectable outcomes of its supervisory work in recent years, despite the inadequacy of the existing legal framework. But the need for a new law persists, and as Genadry reviews his experience as insurance commissioner, and the recognition he received from international peers in top-reputed regulatory institutions upon the news of his contract’s surprising non-renewal, he says his main priority is to see the legacy of fair insurance supervision preserved in Lebanon.
Executive asked Genadry how he responds to allegations that he slowed sector development down during his tenure and why he stayed on in his post despite more profitable opportunities in the private sector. He easily dismisses the first allegation by pointing out that insurance premiums nearly quadrupled in the years while he was commissioner, and that sector profits likewise improved very handsomely even as reserves were boosted more than eight times. As to the question of why he did not resign from his job despite all the challenges, he says, “I believed in the importance of what I was doing and I felt that if I left, I would be a coward. I invested myself in a way that can be done only for a mission, not for a job.”