Pursuant to Article 964 of the Lebanese Code of Obligations and Contracts, the insurance contracts should be dated on the day of their execution, and must state (1) the insured subject, (2) the name and address of the insurer and the insured, (3) the type of the risk covered, (4) the date of commencement and expiration of the risk, (5) the insured value and (6) the insurance premium.

Additionally, Article 10 of the rules and regulations governing the insurance sector in Lebanon, which are outlined in decree No. 9812 of 4 May 1968 (“the Law“), the insurance contracts used in Lebanon should be written in Arabic. They may also be written in a foreign language provided that a translation in Arabic should be included alongside the foreign text, or else the contract will be considered void. In case of any discrepancies, the Arabic text prevails.

Non-life insurance and life insurance companies are regulated in the same manner. However pursuant to Article 1 of the Law, the insurance company shall not engage in the same time with operations included in paragraph one of Article 1 (which includes life insurance) with other types of insurance operations without obtaining a special permit from the Ministry of Economy and Trade (“MOET”). The reinsurance companies that wish to work in Lebanon should obtain all the required permits and licenses as it is the case with the insurance companies.

Pursuant to Article 58 of the Law, anyone who wants to practice the profession of agent or broker must hold a prescribed card as stipulated in Article 39. Article 39 prohibits anyone to work as an insurance broker without obtaining a special license from the MOET. The license conditions are determined by a decree issued by the Council of Ministers upon the proposal by the MOET, and after consulting the National Insurance Board. The applicant should be registered within the Commercial Register.

Pursuant to Article 2 of the Law, the practice of any or all of the operations provided under the branches or sub-branches stipulated in Article 1 is prohibited unless obtaining an authorization (“the License”) by the MOET after consulting the National Insurance Board. Among these conditions is the submission of a bank guarantee.

The required conditions for the License are stipulated under Article 3 of the Law. While the specific timeframe can vary, obtaining the license typically takes 5 to 8 months (estimate based on available information).

The MOET’s final decision to grant, refuse, or amend the license is published in the Official Gazette within three months of the application (Article 6).

The insurance company must be a joint-stock company focused solely on insurance operations (or some of them) listed in Article 1 of the Law (Article 3 of the Law) and must provide a financial guarantee for policyholder commitments.

In Lebanon, there are currently no specific restrictions or controls on who owns or controls insurers, including foreign ownership.

There are no exceptions to the License/authorization requirement stipulated under Article 2 of the Law (Question 4); the violation of this requirement shall be subject to the punishment provided in Article 58 of the Law (Question 9).

Pursuant to Article 4 of the Law, the regulations and conditions applicable to the Lebanese insurance companies also extend to foreign insurance companies. therefore, foreign companies should obtain a License from the MOET.

The MOET specifies the conditions that must be met to obtain a License. A foreign insurance company is required to submit:: (1) a certificate proving that the foreign country allows Lebanese companies to conduct insurance operations within its territories, (2) evidence of possessing legal capacity in their country to conduct the intended insurance operations in Lebanon; (3) proof of having a registered place of residence in Lebanon, (4) documents that (i) evidence the appointment of one legal representative in Lebanon with powers as stipulated in Article 8 of the Law and (ii) prove that the person in charge of the management of the foreign company possesses relevant experience and academic qualifications, (5) an economic feasibility report outlining business expectations for the upcoming three years, (along with other conditions).

All Lebanese and foreign companies are obligated to adhere to the provisions of the Law regarding operations provided under the branches or sub-branches stipulated in Article 1. (for details regarding the conditions that must be fulfilled by foreign companies, please refer to Question 7).

As indicated in Question 4, foreign insurance companies must obtain a License to operate in Lebanon. Pursuant to Article 4 of the Law; the regulations and conditions governing the insurance companies in Lebanon equally apply to foreign insurance companies. Therefore, there are no limitations on branches established by overseas insurers.

Moreover, foreign companies must notify the MOET of any changes to the composition of the board of directors, the general director or the legal representative, as well as any amendment to their (re)insurance policy forms or the adoption of new policies.

According to Article 58 of the Law, shall be subject to imprisonment from one month to one year and a fine of no less than Two Million Lebanese Pounds or to one of these two penalties, (1) every founder, member of the board of directors, director of a Lebanese enterprise, or representative of a foreign company that offers or concludes an insurance agreement, subscription bond, or any document related to the operations listed in Article 1 of the Law without obtaining the required license, (2) anyone who practices the profession of agent or broker without holding the prescribed card stipulated in Article 39 of this law, or after it has been withdrawn, (3) every agent, broker, security user or expert who commits a violation set under Article 40 of the Law, (4) anyone who practices the profession of expert stipulated in Article 41 without being duly  registered, (5) whoever neglects the guarantee against the risks stipulated in Article 44 of the Law.

Pursuant to Article 47 of the Law, the MOET has established an “Insurance Control Commission” (“ICC”), acts as a supervisory authority that supervises the compliance of the insurance companies with the laws, decrees and decisions along with other obligations. Its primary responsibilities include (1) promoting transparency within the insurance sector in relation to Anti-Money Laundering (AML) regulations (2) Ensuring solvency of insurance companies (3) promoting corporate governance practices (4) Strengthening and enhancing the insurance sector and (5) maintaining an efficient, safe and stable insurance sector.

The ICC must:(1) ascertain the financials and legal capacity of the insurance companies (2) supervise the guarantee and verify their validity and monitor the employment of the funds (3) observe the financial conditions of the insurance companies to ensure that they continued fulfilling the conditions on which the license was granted.

Pursuant to Article 47 of the Law, if it appears to the ICC that the legal and/or financial position of any insurance company may lead to its inability to fulfill its obligations, they have the right to ask the insurance company to take the appropriate measures in order to assess its position.

The minimum capital of an insurance company may not be reduced except with the approval of the Minister of Economy and Trade. Article 16 of the Law also stipulates that in the event an insurance company has suffered losses, it must reconstitute its capital within a period of three months as of the end of the financial year in which the losses occurred.

In the event the insurance company suffered losses equivalent to half of its capital (for Lebanese companies) or half of its guarantees value (for the foreign companies) without being able to reduce its losses during the first six months of the following fiscal year, the Minister of Economy and Trade is entitled to take a decision to suspend the company’s license after consulting the National Insurance Board, based on reports by the ICC.

Pursuant to Article 13 of the Law, the minimum paid-up capital to establish an insurance company should be not less than Two Billion Two Hundred and Fifty Million Lebanese Pound.

However, in light of the ongoing economic situation, the ICC has issued a circular No. 1/2023 on February 8, 2023. This circular requires existing insurance companies to increase their capital to reflect the value of the change of the new official exchange rate (15,000 Lebanese Pounds per one US dollar) without defining the new minimum paid-up capital (this needs a law). It is important to note that this requirement might be subject to change in the future as the insurance law is being revised.

It is possible to attach guarantees submitted by the insurance companies before the MOET to guarantee and protect the rights of the insured/beneficiaries since the guarantee deposited by the insurance companies before the MOET serve as protection for the rights of the insured.

The ICC reviews the “Ultimate Beneficial Owner” (UBO) of an insurance company and likely performs Know Your Customer (KYC) procedures on all UBO’s with a controlling interest in the Insurance Company.

As per article 3 of the Law, the General Manager or the Assistant Director must hold a university degree, be of praiseworthy conduct and possess a minimum of 10 years of experience in the insurance business. These requirements are essential for obtaining the License (applicable for Lebanese/foreign companies) (Question 4).

In principle, directors of insurance companies and senior managers are only held accountable when they commit a fault within the scope of their duties. Pursuant to Article 167 of the Commercial law, members of the board of directors and the general manager are liable for committing a fraud and for any violations of the law and the company’s bylaws. They are also accountable towards the shareholders for their administrative errors.

Foreign insurance companies must obtain a license to operate in Lebanon, and the law generally applies the regulations governing Lebanese insurance companies to foreign insurers (Article 4). However, the specifics of licensing requirements and regulations for foreign companies might be subject to change due to the ongoing revisions to the insurance law.

Therefore, the foreign company must also be a joint stock company; and its operations should be limited to those stipulated in Article 1 of the Law. The company must contract with an actuarial expert holding a diploma in the field. Additionally, the foreign company must provide a guarantee to undertake its insurance operations.

The Law does not explicitly impose any restrictions regarding this matter. In fact, third Party Administration (TPA) of claims in both Motor and Medical Insurance is a common practice in Lebanon.

Pursuant to Article 25 of the Law, insurance companies shall employ their entire reserve as outlined in Articles 23 and 24, in the following manner:

1. Cash deposits in the currencies of the insurance contracts.
2. First-class lands, real estate, or real estate insurance located in Lebanon.
3. Lebanese government bonds or those guaranteed by the Lebanese government.
4. Loans on life insurance contracts.
5. Lebanese stocks and bonds.
6. Debts owed by the reinsurance agencies in respect of the re-guaranteed operations with these agencies.
7. Foreign stocks and bonds registered in the country’s stock exchanges.

There are no specific requirements or regulatory expectations related to the management of an insurer’s reinsurance risk.

The ICC currently exercises some level of control over insurance sales in Lebanon. Pursuant to Article 47(4) of the Law empowers the ICC to require insurance companies to modify unclear or vague general conditions in their insurance contracts.

The Law does not explicitly prohibit citizens or residents from purchasing insurance coverage from foreign insurance companies.

Regarding the extent to which insurance contracts may be drawn up and signed electronically by the insured, it is to be noted that paper-signing of the insurance contract is not an essential condition for its establishment. While electronic signatures on insurance contracts are permissible under law No. 81 (2018) issued on the 15th of February, related to electronic transactions and personal data, a comprehensive regulatory framework surrounding e-signatures for online insurance sales is necessary.

The Lebanese legal framework offers several consumer protections for insurance policyholders. The Consumer Protection Law (No 659 of 2005) ensures the provision of high-quality services to consumers. These provisions apply to all contracts between professionals and consumers, provided they do not contradict with the legal provisions governing insurance companies.

Moreover, consumer have the right to file complaints before the Consumer Protection Directorate, responsible for safeguarding the rights of purchasers of insurance products and services.

Additionally, Article 983 of the Code of Obligations and Contracts stipulates that are null and void (1) any clause imposing forfeiture penalties on the insured for violating laws and regulations unless that violation was an outrageous and unforgivable mistake, (2) any clause forfeiting the insured for failure to directly inform the authorities of emergencies or present required documents.

Moreover, owners of motorized vehicles must obtain an insurance policies covering third-party liability for bodily injury and material damage. Similarly, employers of foreign workers must obtain insurance policies covering death, disability, and medical expenditures for such workers. The insurance companies are bound by the pricing rate of these insurance policies set by the ICC.

The insurance sector in Lebanon is regulated by regulations outlined in the Law. This law outlines the regulations for insurance companies operating within the country, applying to both Lebanese and foreign insurers conducting any of the insurance activities covered under the Law’s listed branches and sub-branches.

Subsequent amendments to this law have been limited with no significant updates since 1999. The insurance law is currently being revised by the parliament, and the new regulations might introduce significant updates to the legal framework for insurance companies in Lebanon

As already mentioned, insurance operations in Lebanon are subject to decisions issued by the ICC (Insurance Control Commission) and provisions outlined in the Code of Obligations and Contracts (Articles 950 to 1023).

Article 48 of the Law allows policyholders or the beneficiary to pursue claims against insurance companies before the Insurance Arbitration Council. This Council is established within the MOET and comprises experienced insurance professionals that can handle complex commercial claims. However, its jurisdiction is limited to claims at 75,000,000 LBP or less. It’s important to note that the ongoing revisions to the insurance law might introduce changes to Article 48.

Nevertheless, commercial/financial courts, remains competent to handle complex insurance-related cases. Judges in these courts possess the necessary experience to handle complex and various insurance disputes.

The parties to an insurance contract may choose arbitration as an alternative dispute resolution method.

However, it’s crucial to note that clauses under an insurance policies issued in Lebanon, concerning risks existing in Lebanon and falling under the branches stated in Article 2 of the Law, are considered null and void if they reference arbitration where the arbitrator is not domiciled in Lebanon and does not issue their award within the country.

Pursuant to the recent Judicial Mediation Law in Lebanon, the parties have the option to initiate mediation proceedings even after court proceedings have begun.

There is no specific statutory transfer mechanism available for the sales or transfers of books of (re)insurance under Lebanese law.

Companies that intend to enter the insurance market in Lebanon have to comply with the several necessities and conditions set out in the Law as well as other related regulations. The ICC and the MOET are generally supportive of new market entrants, particularly foreign companies. They often provide guidance and assistance throughout the licensing process and regulatory compliance to facilitate entry into the market.Top of Form

The insurance industry in Lebanon suffers from various challenges, most notably the absence of new laws that implement the development of the innovative technologies.

The insurance laws were not amended to encourage experimentation in financial technology innovation. Due to the financial crisis that hit Lebanon, all the tentative to create an innovative digital market made the plans impossible to be implemented, not to mention the slow speed and connection of the Internet that negatively impacts the interaction process and affects the speed of downloading electronic links.

Kindly see Question 29.

Lebanon does not have comprehensive data protection legislation. Privacy provisions are contained in Law No. 81 of 10 October 2018 related to electronic transaction and personal data.

There is no such restriction ruling or order on insurance enterprises’ cross-border transfer of personal data. However, with the increasing awareness of privacy concerns, we cannot exclude the possibility that the competent authority will take action in this regard in the near future.

There isn’t a comprehensive global regulatory framework for ESG.

There isn’t a specific legal or regulatory framework in Lebanon that directly addresses diversity and inclusion for (re)insurers.

Article 7 of the Lebanese Constitution stipulates that all Lebanese are equal before the law. They equally enjoy civil rights, and assume obligations and public duties without any distinction among them.

Article 12 of the Lebanese Constitution also promotes equal opportunity for public employment based on qualifications and merit. However, this doesn’t extend to specific diversity and inclusion requirements within private companies like (re)insurers.

Expect as provided for in the Constitution in this regards, the law didn’t stipulate any special provisions in respect of diversity and inclusion to which (re)insurers are subject (i.e., cultural background, race, gender, interest diversity).

However, the law No. 220 dated May 29, 2000, mandates specific requirements for hiring people with disabilities in the private sector. Employers with 30 to 60 employees must hire at least one person with a disability. For companies with over 60 employees, at least 3% of the total workforce must be comprised of individuals with disabilities. Employers who fail to comply with this law are subject to a financial penalty of twice the minimum wage for each unfilled position.

The future of Lebanon’s insurance market in the next five years faces uncertainty due to the ongoing delay in amending the insurance law, particularly regarding digital insurance companies. This delay restricts the development of the digital transformation market, which the World Bank has identified as a key area for growth.

In our opinion, the market lead will be taken by (i) merged companies: mergers could create stronger financial entities with wider product offerings, making them more competitive and (ii) Medical insurance providers: The decline of government-backed healthcare solutions will likely increase demand for private medical insurance to manage healthcare costs.