The insurance sector in Egypt is set to take off, Sherine Nasr reports "You are eligible for a free membership to our Road Assistance Programme." The offer made by the insurance company includes coverage in case of accident, flat tyres, replacement of broken windshields, or even running out of gas. Who ever thought that repairing a flat tyre can be the responsibility of the insurance company? The concept of insurance is developing fast in Egypt. For the past century, insurance was mainly about property and life. Although both remain major targets of insurance, a full- fledged industry, with new legislation, products and services, is in the making. "The government is aware of the importance of this sector and is willing to develop it through various enabling regulations and legislative reforms," said Prime Minister Ahmed Nazif in a speech delivered on his behalf by Mahmoud Mohieldin, minister of investment, during the Euromoney Insurance Conference that was held Tuesday to discuss means to develop the insurance sector in Egypt. Indeed, 2010 will mark the second phase of reforming the insurance sector. According to Ziad Bahaaeddin, chairman of the Egyptian Financial Supervisory Authority (EFSA), major institutional and legislative reforms will be introduced by EFSA in order to help create an enabling environment to develop the insurance sector. "We are discussing with the Central Bank of Egypt the possibility of reintroducing bank insurance as a vital activity that used to be offered by banks in the past," said Ziad. Cooperation with the Ministry of Finance is ongoing to develop a cadre of insurance specialists, namely actuarial expertise. EFSA is also studying means to establish a centre of arbitration and dispute settlement with the task of achieving just and swift settlements to disputes that would normally spend years in the courts. "Unsettled economic disputes are a major concern to all investors and a sign of an unfriendly business environment. However, the economic courts will start operating soon and people will immediately feel a difference," said Ziad, adding that EFSA would continue to practice its role as the main body supervising all non-banking financial services in the country. Meanwhile, new regulations to coordinate the relation between insurance and mortgage finance are about to be issued. Insurance experts are also developing the means by which insurance companies can fairly price multiple services. "Pricing of different services should be done with the help of specialised firms. So far, this is not the norm in the market. But we should note that random pricing is most detrimental to companies and clients alike. The industry is in need of specialised pricing mechanisms and we are lobbying to impose such a demand," said Mahmoud Abdallah, chairman and CEO of the Insurance Holding Company (IHC). Since 2004, the insurance sector has been undergoing substantial financial reform. One of the main pillars has been the restructuring of state-owned insurance companies. At this stage, IHC was established to take responsibility for owning, restructuring and reforming the four state-owned companies, namely Misr Insurance Company, Al-Sharq Insurance Company, National Insurance Company of Egypt, and the Egyptian Reinsurance Company. "As part of the restructuring plan, Al-Sharq and Egypt Reinsurance were merged into Misr Insurance Company, a step that helped create an insurance giant in the MENA region in terms of assets and written premiums with LE2 billion paid-up capital," said Abdallah. Further, there are new developments in the Egyptian economy that open boundless potential for the insurance industry. "As more enabling regulations are being enacted, and with the advent of new possibilities in the economy, the insurance sector has bountiful opportunities than ever before," said Ahmed Darwish, minister of administrative development. For example, the new health insurance scheme that is being laid out by the government presents a golden chance to insurance companies. Darwish underlined that his ministry is adopting a major project to connect government services in one network. "Soon 12 governmental bodies will be connected. The aim is to facilitate the means by which citizens and governmental bodies can get and exchange official data according to strict privacy and good governance principles. For insurance companies, this is another major advantage," commented Darwish, explaining that measurable cost reductions will be reported by insurance companies once the service is completed. A new prospect is further opening up before insurance companies as the government is studying the means to introduce insurance services to micro-finance projects. "Micro- finance insurance will not only provide protection to the active poor, but it will also provide a gate through which these deprived categories will be introduced to different financial services," said Adel Mounir, deputy chairman of EFSA. According to Mounir, NGOs along with the two private sector micro-finance lending companies that have recently been operating in the market could provide 1.4 million Egyptians with micro lending services. "Only 38 per cent of them had access to insurance services," said Mounir, adding that the concept of insuring micro-finance activities is not common in the Egyptian market despite the fact that this market is vast, vulnerable and in dire need of variable insurance services. Sadek Hassan, chairman of National Life Insurance Company, underlined that cooperation between micro-finance lending institutions and insurance companies is vital. "These institutions can provide us with valuable information about their clients. A form of collective insurance for a big number of beneficiaries can be introduced in proper terms that are suited to the special needs and abilities of these categories," said Hassan.
