عندما قدمت عرضاً لمذكرات المرحوم جاد قبّان في 12 آذار2008 ذكرت بأني سأحاول أن أدون الفصل الخامس عشر المخصص لتجربة صاحب المذكرات كوسيط إعادة تأمين في العراق. واليوم، وبعد أن حصلت على موافقة ورثته بالنشر، يسرني تدوين نص هذا الفصل. ليس النص تأريخاً لجانب من النشاط التأميني في العراق لكنه، في رأي، مساهمة غير مباشرة في توفير مادة، رغم محدوديتها، يمكن الاستفادة منها في بحث جانب مهمل في هذا النشاط ـ أعني به دور وسطاء إعادة التأمين العالميين. فهذا النص يعكس حقاً منهج كتابة المذكرات التي تجمع بين السيرة الذاتية وسيرة الغير. لعل أحدهم يقوم بترجمة هذا الفصل للعربية لتعميم الفائدة. أدخلت بعض الهوامش في نهاية النص من باب التوضيح لفائدة القراء الشباب ممن لم يعاصروا الأشخاص (بعضهم رحل عن دنيانا والبعض الآخر استقر في بلاد أخرى) ولا الفترة التي تحدث عنها صاحب المذكرات. مصباح كمال لندن 1 نيسان/أبريل 2008
Jad G Kabban:
THE IRAQ EXPERIENCE
[This is chapter 15 of the late Jad Kabban's Memoirs of a Pioneer Arab Insurance Broker (Beirut: N.P., 2004), pp 113-121 My first experience in Iraq was when Brown Boveri Co, Mannheim, were awarded the construction of an energy project in Iraq. Our relationship with BBC had been established when we were invited to negotiate insurance for one of their projects in Libya. At the time, we enjoyed an extremely rewarding experience with the Libyan insurance market starting with the Al-Moukhtar Insurance Co, and subsequently with the Libya Insurance Co, when it became the sole state-owned insurance company in Libya. BBC being aware of the work that we had performed for Uhde in Libya in writing insurance policies with Libya Insurance Co for their projects that satisfy the contractual obligations of principal and contractor alike, led BBC to seek our assistance in Iraq. BBC felt that because of our knowledge of the Iraqi market, including the all-important similar cultural background, that we would be able to deliver on service by meeting the requirements of both principal and contractor. This project was in 1973 and it was our first in Iraq. The National Insurance Company of Iraq (NIC) was the exclusive state-owned company that handled insurance of construction projects and all other general insurance risks. The Iraq Insurance Co (IIC) at the time was responsible for writing life insurance whilst the third insurance entity was the Iraq Reinsurance Co (Iraq Re) that handled reinsurance exclusively. This included treaty and facultative reinsurance sought by the NIC and IIC. However, at the time, Iraq Re enjoyed a compulsory cession by the other domestic insurers, to the extent of twenty-five percent of their written portfolios. This, however, excluded construction projects, which were the responsibility of NIC’s construction/engineering department, headed by the late Moayad Al-Saffar. The nature of the business required greater international experience and expertise; hence, NIC had the freedom to reach the international markets directly. Moayad Al-Saffar had a university degree and was armed with enormous experience in the field of construction/engineering insurance. Not only was he respected by his colleagues and other department heads and clients but was also feared by clients, largely because of his broader knowledge of the industry and the tactics used by international contractors. These often wrote DIC/Security covers outside of Iraq at premiums Moayad felt should be charged and maintained in the Iraqi insurance market and, therefore, contribute [to] the growth of Iraq’s insurance sector and the country’s economy in general. We worked on a very professional and trustworthy relationship. Moayad was therefore satisfied to ask us to quote on projects related to our clients, a fact he sought from other international brokers with whom NIC as a whole had long-term relationships. Bowring and Alexander Howden were two of the Iraqi market’s leading international intermediaries. Transparency and respect for each other crowned my first experience with Moayad. Moayad also felt that we were more competitive than the other brokers were as evidenced by the BBC project for which he had asked us to quote. The BBC project was a starter that triggered an ensuing relationship, which lasted throughout the years until the second Gulf War in 1990 when everything was suspended. With the application of UN sanctions against Iraq, reinsurance protection from the international market was not allowable, and the Iraqi insurance market therefore proceeded to self-insure its own domestic risks. Prior to the Gulf War and following the first project negotiated with NIC on behalf of BBC, I visited Iraq regularly and placed our company in the position of a broker trusted by NIC and the rest of the insurance market. We were invited to quote on some of the major construction projects in the country including major express highways connecting cities and towns. Such projects were undertaken by leading international civil contractors, the majority of whom were Turkish and South Koreans with the latter having the reputation of executing projects with almost military discipline and precision. German contractors were also heavily involved in Iraq’s development program. Among the larger projects awarded to us by NIC was the famous Bekhme Dam with a total value in excess of US dollars one billion two hundred million. During the execution of the works, which had been awarded to Yugoslav and Turkish contractors in respect of civil works, I decided to invite our lead underwriter from the Commercial Union Insurance Co of the UK, Mr Ken Bunker, and Colin Lockyer of our office to join me to visit the project site. Ken was one of our leading underwriters with whom we wrote a large number of our projects. We developed a relationship that over the years was surrounded by trust and respect. Both Colin Lockyer and Garry Lille of our office had known him before I had the pleasure of meeting him and later met his spouse, following which we became good friends at the family level. Bekhme Dam was then the largest “rockfill” dam ever to be constructed in the world. It was also designed to generate power to Iraq. Mechanical works for this project had been awarded to a Russian contracting group. Because of the Gulf war, execution of the mechanical works was, as far as I know, suspended. Prior to the Gulf War in 1991, five engineering projects had been awarded to various contractors, mostly from Europe. Following competition with other brokers, we proved to be most competitive. The value of these projects was in excess of US$ three billion with different values per project varying between US dollars five hundred million or lower and six hundred million. Another single petro-chemical project was awarded, as I recall, to an American contracting group and valued at approximately US dollars three billion. This last project was to be awarded for insurance to M&M although we had also been invited to quote and were equally more competitive than our counterparts. Mr Moaffaq Ridha, then chairman and general manager of NIC favored working with large brokers, the likes of M&M, Bowring and Alexander Howden. Moaffaq had worked in London for over six years representing the Iraq Reinsurance Co at its contact office, which was one of the oldest contact offices in London. He was therefore impressed with the performance of the above brokers. He was convinced that they would deliver and Jad Kabban and his group was a much smaller broker. Moaffaq was therefore not sufficiently convinced of our capabilities. Over the years of our cooperation with NIC, I invariably met on every visit to Iraq with Moaffaq and gradually developed greater confidence in our ability to perform. This was coupled, simultaneously, with the support that was given to us by Moayad Al-Saffar, Baker Al-Munshi, Sa’ad Al-Beiruti and others with whom we had worked, being members of Moayad’s department, Fuad Abdallah and others. In respect of the large projects with values in excess of US dollars three billion, Moayad had to demonstrate to his management that we were not only more competitive than others but that we were more professional and demonstrated to NIC the respect and prestige it deserved as a client. We outlined each project separately, giving rates, conditions, and deductibles in respect of each project. There was a high degree of clarity in our submissions that we seen as a demonstration of our professionalism as much as a sign of respect to a major client. One of our competitors, instead of making a proper presentation, had simply handed over to Moayad a slip of paper listing the various projects and their corresponding rates. Moayed read this as a manifestation of disrespect and belittling the importance of the client. In a sense, their behavior was characterized by complacency and disrespect, ignoring NIC’s stature and reputation. This behavior, if anything, proved so disrespectful to NIC’s management that the general manager authorized all the above-mentioned projects to be awarded to our company. This also included the single project valued at US dollars three billion which initially was to be awarded entirely to our competitors, then was to be led by our competitors in a joint venture with our group but finally awarded in its entirety to UIB. Unfortunately all these projects were suspended following the invasion of Kuwait by Iraq in August 1990 and subsequently became either dormant or cancelled, following the expulsion of Iraqi forces from Kuwait and the imposition UN sanctions on Iraq. Prior to the above events, I had approached NIC with a view to packaging the insurances of Iraq’s oil risks in one policy. We have successfully applied the packaging concept to insuring the material assets, business interruption, general third party liability, aviation product and fuelling liability and oil operators’ extra expenses and had the package policy insured by Libya Insurance Company. Before the proposed approach, NIC insured all the Iraqi oil assets under separate policies, the number of which exceeded twelve different documents. This was counterproductive, costly, possibly created gaps and/or overlaps in the protection afforded. Our approach would do away with the multiple deductibles applicable to each policy of insurance. Ours was to have one single deductible in one policy. During the discussions with NIC’s general manager and his staff involved in the property reinsurance arrangements, the chairman of the State Insurance Organisation, the insurance supervisory authority in Iraq, the late Mr Adib Chalmeran, had come to know of our capabilities and performance on different risks in Iraq and other Arab countries. He strongly recommended that our proposal be taken seriously and implemented, or at least to give UIB a chance to quote on this business. Once the decision had been taken to proceed on our proposed package, Moaffaq Ridha decided to invite competition and asked Alexander Howden in the person of Bob Naudi to quote as well on the program. We did not mind the competitive tendering of the program as long as the terms of the tender were applied fairly. For example, the bid of the brokers to be submitted by a certain date, the quotations to be supported by known leading oil and energy reinsurers, etc. We complied to the letter on the conditions imposed and I, personally, proceeded to Baghdad with a thorough and elaborate presentation of our terms, meeting the deadline imposed on the two brokers quoting on this business. Failing to comply with any of the conditions meant disqualification of the broker, which is an established practice. I was in Baghdad on the exact date with a detailed presentation, complying with all the conditions of NIC’s tender. Our competitors, Alexander Howden, did not show up and even have not submitted quotations by fax, mail or otherwise. Whilst I stayed in Baghdad for a few days, calling daily on NIC, awaiting a decision by the general manager of NIC, I knew quite well that our competitors did not meet any of the tender terms. They did fax, two days later, totally unsupported terms since no reinsurer was named; they simply put up terms lower than ours. They had obviously waited for our proposal, allowing them to put up a quote, unsupported, to NIC. They had “desk quoted” the risk and hoped they would receive a firm order. Based on the delay alone and not complying with the deadline should have ousted and disqualified them from the tender. Parties within NIC must have planned it all. The contract was awarded, unfairly, to our competitors. We had subsequently come to know that the list of reinsurers on the cover exceeded some sixty names, many of whom were not either known or hardly ever heard of. I do know that severe criticism by senior officers of NIC had been made to the general manager for having awarded the contract to Alexander Howden who had neither complied with the tender conditions nor produced a high level of reinsurance “security” since the majority of them were unacceptable and/or unknown, especially in the oil and petrochemical industry. Such is the way of life. Transparency and the hankering after perfection are not always necessarily conducive to success but in the long-term only professionalism, sound and honest competition prevail and sustain success. The Gulf war of 1991 disrupted everything including all the development projects and their insurances. The oil property program awarded to Alexander Howden also came to an end and since then Alexander Howden itself was taken over by Aon. Our policy has always been to honor the relationship with our clients and in spite of the suspension of all communications with Iraq, I decided to visit Baghdad several months after the war had stopped. I traveled from London to Amman, Jordan and stayed overnight to prepare for my land journey to Baghdad. Before departing for Baghdad, I had established some of the needs of our friends at NIC, IIC and Iraq Re. This was in terms of medical supplies and vitamins and other food products. Some of my friends in Jordan also recommended that I take along Middle Eastern sweets, such as baklava and an assortment of similar delicacies. The UN sanctions imposed on Iraq then prohibited the import of such products at the commencement of the enforcement of these sanctions. Friends told me that these products were non-existent in Baghdad due to the lack of sugar, nuts and other ingredients that make up this delicacy. The most famous producer of these sweets in Jordan is “Al-Jabri” whose ancestry is traced to Syria. I must have purchased over a hundred kilograms of these sweets to be distributed amongst our friends in the insurance companies. This was in addition to a substantial supply of Cadbury’s chocolates, the famous British brand which I had brought along from London. The trip to Baghdad, my first via the overland route, took seventeen hours on the road. I had hired a Jordanian taxi, exclusively for myself and filled it up with the above items. What took a bit longer than usual was the bad condition of the car I hired, especially its tires that had been worn out following the frequent trips made to Baghdad. The driver was, nevertheless, well acquainted with the road and the system including the rules at the border stations of Jordan and Iraq. The Jordanian authorities allowed all my possessions and load to go through. In fact at the Jordanian border there were many shops selling various products, mostly food and sweets, as they were familiar with the needs of travelers crossing into Iraq. The problem arose at the Iraqi border where civilian and military personnel were stationed. Customs personnel would search thoroughly every vehicle that went through. To my great dismay and frustration, they did not allow the “Al-Jabri” sweets to go through. They considered that I had carried an enormous supply, contrary to their policy. Their argument was that whilst they allowed a few kilos of sweets to pass for personal or family consumption, they could not allow the over one hundred kilos to pass through. I argued that this supply was intended for distribution to families within the insurance industry. They objected on the grounds that it was unfair that some people, in Baghdad, would enjoy such sweets whilst others were deprived of it because of the sanctions imposed then, on Iraq. I could see their point of view but by the same token I could not allow that entire load to be held at the border for it to rot or for some of the customs personnel to enjoy it along with other border members. I was not permitted to take all the Middle Eastern sweets but only five kilos. Surprisingly, they did not mind the Cadbury’s chocolates of which I had a few cartons. Several hours were spent at the border hoping for the release of my sweets in vain. The driver, who was quite familiar with this problem, considering his frequent trips to Baghdad, only then stated that it was customary for such quantity of sweets to be banned. He did not alert me of this situation before leaving Amman and only expressed his knowledge of this matter at the border. We then proceeded to Baghdad where my friends from NIC had reserved a room for me at the Al-Rashid hotel. Altogether, it was a very tiresome journey, coupled with my fears of an accident on the road in view of the worn-out tires of the car that transported me to Baghdad. I reached very late at night and proceeded to unpack and hit the sack. Next day I met with senior officers of NIC and IIC and relayed to them my experience at the Iraqi border. Abdel Khaleq Raouf, chairman and general manager [of] IIC, managed to call, I believe, someone in a ministry. Instructions from the ministry went to the customs people at the border, following which the sweets were released and shipped to Baghdad with the next available transportation heading for the capital. My trips to Iraq visiting with people in the insurance industry averaged two to three times a year. Although there was no business to be exchanged, my company directors and myself shared the view that we should be in Iraq to hold hands with our clients not only when business was enjoyed but more so in difficult times. Our intention was to visit with them and share our knowledge of the international markets and the latest developments in the industry. They were unfortunately cut off from the world markets and were unable to receive any literature or publications relating to the insurance industry. In spite of this, it was always acknowledged that staff and senior officers in the insurance industry in Iraq were amongst the most advanced and highly educated people in the industry in the whole of the Arab World. Evidence of this is reflected in the number of Iraqis holding positions of leadership in the insurance industry in the Arab World. Many of these friends are in the UAE enjoying the finest reputation and respect by their subordinates and employers. Iraqi insurance people that I have met over the years and for whom I have the greatest esteem have held or are holding top positions. These include Dr Mustafa Rajab, Kais Al-Mudares, the late Moayed Al Saffar, Moaffaq Ridha, Moaffaq Ghazi, Abdul Khalek Raouf, Dr Abdul Zahra Ali, Sa’ad Al Beiruti, the late Adib Chalmeran, John Melkon, Baqer Al-Munshi, Wissam Al-Haymas, Munem El Khafaji, the late Vartkes Boghos, Misbah Kamal, our colleague at UIB, and many others. This partial list does not include the current leaders, Fouad Abdallah and others, running the insurance and reinsurance industry in Iraq. Besides their leadership qualities, I have always known my Iraqi colleagues to be among the proudest, yet the most humane and down to earth people I have known throughout my career. Subsequent to the first visit and on more than one occasion, my son George accompanied me to Baghdad. On one of his trips we held a seminar organized by the Iraqi insurance industry, and attended by selected staff of the insurance companies, engineers and technicians of the oil industry and members of the Oil Ministry. The subject of George’s elaborate presentation was “Control of Well Insurance,” a topic that was highly appreciated by the over one hundred participants in this seminar. He was highly complimented by his audience and especially the Iraqi engineers managing and operating the oil industry, for his thorough knowledge of the specific subject and the oil industry as a whole. During George’s presentation, which was both visual and oral, I felt proud of my son and could not help control my emotions, my eyes expressed my feelings and Fouad Abdallah standing next to me observed this reaction and commented praising me on my son’s commendable performance. I was proud of my son, yet embarrassed for having emotionally reacted to a presentation superbly effected by George in front of an audience of professionals in their own industries. Our frequent visits and updating members of the insurance industry through books and other publications was a token of appreciation and recognition for the loyalty of the people whom we consider, on reflection, to have contributed in their own way, to a certain degree, to our success and progress. The Iraqi relationship and frequent business trips prior [to] the Gulf War later led to an unpleasant and traumatic experience, which I have decided to cover in a separate chapter. Footnotes  I made similar remarks on these covers in a paper in Arabic recalling my experience at the Engineering Insurance Department of NIC between 1968-1977. I hope to be able to post it on the blog soon.  There was an additional element that brought Jad and Moayad together: Beirut and Lebanon. Jad began his insurance broking career in Beirut and Moyaed spent a few years in the city.  The Bekhme dam has a chequered history: The Bekhme Gorge site is located on the Greater Zab River, a tributary of the Tigris River. In 1937 it was identified as a good place for a high dam. In 1976 engineers made another evaluation for a dam site on the Greater Zab River for the Harza Engineering International Corporation of Chicago. The company had prepared a report on three alternative sites for the proposed high dam. The Bekhme dam site was selected and work was well underway in 1989. Owing to unusual circumstances in Iraq in the early 1990s the building of a dam across the Greater Zab River in the vicinity of a small village called Bekhme was stopped and the project abandoned. With this termination, the archaeology of this part of the Greater Zab River, called the Sapna Valley, was given a reprieve. In the Aug. 4, 1991 San Francisco Times, Thomas Goltz reported that the Kurds had turned the unfinished dam into a virtual "gold mine." To the Kurds, the project was designed and intended primarily to inundate Kurdish lands. It was therefore a target of their hatred. Up to the time of its completion, the project cost $1.5 billion. It was a joint venture of Istanbul-based ENKA Insaat and the Yugoslav Hydrogranda. Consulting work was done by the San Francisco-based Bechtel International. When Americans became involved in the project, U.S. Ambassador April Glasspie (Randal, 1997) made a visit to the site prior to its dismantlement. The dam had not been touched by U.S. aerial bombardment during the invasion of Iraq. Unprotected by the Iraqis, and abandoned by the Iraqi army, the dam site became a unique source of ripe revenue for the Kurds. Everything removable and saleable went, including trucks, tractors, steel girders, machinery, electrical cables and miscellany. Even scrap metal was hauled across the border to Iran where it was sold. According to the report, it was unclear as to whom the proceeds of the sales went. Massoud Barzani, the head of the Kurdistan Democratic Party (KDP) avowed no knowledge of the looting of the dam site. In a counter statement, Barzani noted that money was needed to rebuild 4,000 villages were destroyed and life disrupted by Saddam Hussein since 1975. The above information, slightly edited, was taken from Ralph S Solecki, “The Bekhme dam project in Kurdistan Iraq: a threat to the archaeology of the upper Zagros river valley,” International Journal of Kurdish Studies (1/1/2005) accessed at http://www.encyclopedia.com/doc/1G1-135732901.html on 31 March 2008. The reconstruction of the Bekhme dam was resurrected after the US invasion of Iraq in 2003 and some preliminary work on the site has already been completed according to various reports in the Iraqi press.  The position taken by Mr Ridha was not meant to throw doubt on the capability of Jad Kabban and his colleagues who were operating in London and Athens as the Middle East subsidiary of Marsh & McLennan Inc, New York. Ridha's position was a reflection of his understanding of the workings of trans-national corporations. In his view, such corporations are more likely to ditch their subsidiaries in case the subsidiaries fail to perform or are embroiled in legal or other problems. He felt that as the chief executive in charge of a state-owned company with nearly one thousand employees he should work with the headquarters of the corporation in New York. That took the form of having cover notes issued to NIC in New York and not by the subsidiary in London which had placed the facultative reinsurances of NIC. This arrangement provided Ridha with the comfort and assurance he wanted.  The others included Dhia Mustafa and the engineers Basil Al Nouri and Jassim Al Ani.  Mr Rouf is now the secretary general of the Cairo-based General Arab Insurance Federation.  The list is longer. I hope that someone with interest in the history of Iraq’s insurance industry will study the ‘brain drain’ suffered by the industry and how, in conjunction with the impact of wars and years of international sanctions, have contributed to its decline. Towering figures like Mustafa Rajab and Vartkes Boghos, for example, were behind the creation of Iraq Re and later assumed top executive positions in insurance companies in the United Arab Emirates (Rajab where until recently he was the general manager of Al Dhafra Insurance Co) and Britain (Boghos where he was chief executive officer of St Paul a US insurance firm).  Under the UN sanctions regime (1990-2003), Iraq was deprived form access to developments in the field insurance. Of course, the deprivation affected all areas of life. So the thought of taking insurance books to Iraq was a significant gesture on the part of Jad Kabban. As far as I know no other international broker or underwriter set foot in Iraq during this period.