Nesma Nowar reports on Egypt's insurance companies' behaviour on the back of the 25 January Revolution When Egyptian citizen Mohamed Ali had his car stolen amid the events surrounding the 25 January Revolution, he was concerned whether his insurance company would cover his loss, given the unprecedented political unrest. Indeed, much theft and damage to private property took place on the back of the withdrawal of the police and security forces during the revolution, with looting, arson and armed robberies sweeping the country. Insurance companies worked hard to find a precise description for the events surrounding the revolution. As soon as protests began, the Egyptian Insurance Federation scrambled to assess damages and reach a consensus on how to define the events. "We classified the events from 25 January to 11 February -- when president Hosni Mubarak stepped down -- as civil commotion which erupted as a result of social and political demands," Egyptian Insurance Federation Chairman Abdel-Raouf Kotb told Al-Ahram Weekly. Accordingly, all damages resulting from the events surrounding the revolution were to be covered under strikes, riots and civil commotion (SRCC) insurance, which is frequently implemented alongside fire insurance. It was necessary to find an appropriate definition, because, had the events been classified as a revolution or popular uprising -- whose risk classification level is higher than that assigned to SRCC �ê" there would have been no insurance coverage to be had. Kotb told the Weekly that there was an agreement to classify the 25 January Revolution as peaceful, in which power was handed over peacefully from the former president to the Supreme Council of the Armed Forces (SCAF). Further, the federation agreed in late March to define theft and damage to property as civil commotion, thus recommending that insurers reimburse claimants who had SRCC coverage. It is worth noting that the federation's decision is by no means compulsory. "We just provide a guideline, and insurance companies are free to take it or leave it," Kotb added. Still, most insurers have accepted the definition of the events as civil commotion, thereby guaranteeing coverage. Egyptian insurance company Arab Misr Insurance Group (AMIG) Managing Director Alaa El-Zoheiry went on to explain that SRCC insurance covers any damages resulting from rioting by more than two persons in factories, hotels and public places. However the reason for the riots should not be political. Meanwhile, the unprecedented political unrest that followed the revolution urged the federation to produce a new insurance product, termed political violence coverage. The new product, Kotb explained, is designed to cover all loss and damage resulting directly from acts related to civil war, revolution, civil unrest and rioting, civil disobedience and popular uprising, hitherto excluded from insurance policies. El-Zoheiry stated that his company launched political violence coverage two months ago. "There is a demand for the new insurance; however it is still too early to tell how significant the demand is," he told the Weekly. Insurance companies have paid out millions of pounds in claims for compensation for properties and businesses damaged during the protests. On the back of the revolution, Kotb argues that the rise of premiums on certain insurance products is inevitable because the risk has increased. For instance, the number of car thefts has risen dramatically after the revolution. Meanwhile, insurance companies have recently witnessed tough losses due to the increase of car thefts, following post-revolution insecurity in Egypt. As a result, Kotb said, the federation studied the possibility that the customer be made to pay 50 per cent of the premium, in order to be able to cover losses from car thefts and armed robberies. Should a customer prefer not to pay such a rate, he or she should be prepared to bear the deduction of 25 per cent from the value of the car in case of theft. However, El-Zoheiry added that his company was unable to raise premiums due to high competition in Egypt's insurance market. "Premiums witnessed a slight increase that did not exceed five per cent," he told the Weekly. On the other hand, Kotb estimates that insurance companies have paid out from LE500 million to LE700 million in claims as a result of the damage following the revolution. He added that there are 29 insurance companies operating in the Egyptian market. Both Kotb and El-Zoheiry believe that the Egyptian insurance industry has great potential especially after the revolution, given people's increased awareness of insurance policies. The bad news, according to El-Zoheiry, is that the increase in claims, after the revolution, has been higher than the increase in the demand. "The solution, in this case, is to raise premiums, but we cannot do that due to the high competition," he noted.
