Listen to the article
The die is cast for Lebanese insurers. The MEA (Middle East Airlines) fleet is covered by annual war risk insurance policies obtained from foreign insurers.
A meeting called last Monday by the caretaker Minister of Economy, Amine Salam, to discuss the issue of insuring the MEA fleet, the national airline, led to no results. The lack of progress was predictable.
For at least the past twenty years, since Mohammed el-Hout was appointed CEO of MEA, the company’s fleet has been covered by annual war risk insurance policies taken out with British insurers. Despite multiple appeals by the Association of Insurance Companies in Lebanon (Acal), MEA’s CEO has never changed his position, sources say.
MEA Reduces Its Operations
According to a Lebanese insurer interviewed by This Is Beirut, the law allows MEA to take out hull insurance with the insurer of its choice, given its legal status. MEA is a privately held company, 99% owned by the Banque du Liban (BDL). It is governed by the Commercial Code and the Code of Obligations and Contracts.
In this context, according to another source close to Acal, if Lebanese insurers had been approached by MEA, they could have likely negotiated better war risk insurance terms. In practice, MEA’s foreign insurers have reduced the annual war risk coverage of its fleet by 80% due to escalating tensions in southern Lebanon and increasing war risks.
As a result, MEA had to relocate a significant portion of its fleet to other airports in the region, reduce its operations by 80%, and reschedule its flights.
A Pool of Lebanese Insurers
That being said, given the amount of equity of each Lebanese insurer and the size of MEA’s fleet, insurance companies in Lebanon would need to form a pool among themselves to issue a hull insurance policy on behalf of MEA. This is not an impossible step to take. An insurance policy from Lebanese insurers would have revitalized the insurance industry in the country.
Air France Is Still Operating
While demand from Lebanon intensifies, MEA is letting down the Lebanese people. Paradoxically, Air France continues to operate flights to Beirut similarly to before the start of the Gaza war. Hats off to this airline which, despite the situation worsening at the southern border of Lebanon, is still operating flights, while its Western counterparts like Lufthansa and British Airways ceased serving Beirut’s international airport.
