Egyptian insurance sector awaits new law | Articles and studies

Foreign insurance companies operated in Egypt during the second half of the nineteenth century, providing insurance coverage for the production and marketing of cotton crops. With the beginning of the twentieth century, national companies began to appear as early as 1900. and their activity was initially limited to fire insurance and then expanded to car, accident and marine insurance, and hence the emergence of insurance companies during the 1920s and 1930s, when Talaat Harb founded the Egypt Insurance Company in 1934.

After the war of 1956 the British and French insurance companies were liquidated and in 1961 all the companies were nationalized and the work was limited to three public sector companies and one reinsurance company. With the policy of economic openness during the seventies, the establishment of private companies Egyptian. companies were allowed and foreign contributions to capital were allowed Insurance companies, then foreigners can own all the capital of insurance companies since 1998.

The creation of Egyptian, Arab and foreign companies continued, until the number of companies operating in the market reached 41 companies, but until fiscal year 2020/2021 which ended at the end of last June, the assets of these companies did not exceed 153. billion pounds, which is less than the assets of the sixth bank, according to the value of assets at that time between the Egyptian banks, the Arab-African Bank, whose assets amounted to 218 billion pounds.

Total premiums for insurance policies for insurance companies amounted to .5 47.5 billion, but this value represents seven per thousand of gross domestic product in the same fiscal year, which reached 34 6.34 trillion, which is a low percentage that requires the insurance sector. to increase by various means, including the enactment of a new commercial insurance law replacing the law enacted in 1981 as amended in 2008.

The law increases the compensation for car accidents

This law will include the increase of the capital of the companies from 60 million pounds currently to 150 million pounds and more for the companies that carry out oil and aviation insurance activities, as well as allowing the establishment of specialized companies in an insurance branch such as is the medical activity. where they expect to be allowed to start five new companies.Health companies are under the supervision of the Financial Supervisory Authority, which has monitored the work of insurance companies since its inception in 2009.

It increases the maximum value of car accident compensation for material repair for car repair from ten thousand pounds currently to twenty thousand pounds, and compensation for the dead and those with total permanent disability from 40,000 pounds to 100,000 pounds, a law that lasted three years for him. prepare and had to be issued during the first quarter of the current year.

The 41 insurance companies operating in the Egyptian market vary among the 25 companies working in the field of property and liabilities, compared to the 16 life insurance companies for people. life insurance.

The question remains about the small size of insurance activity compared to the size of the Egyptian economy, despite the historical antiquity of the practice of insurance activity, the large number of companies and the variety of their ownership models, as well as the variety of branches of Activity of property insurance in eleven branches: fire, maritime transport, inland transport, ship crews and aviation Compulsory vehicle insurance, supplementary vehicle insurance, engineering insurance, oil insurance, accidents and medical insurance.

Low income is one of the reasons for lack of insurance

There are many reasons for the low demand for insurance, including the public preference to deal with state-owned companies, thinking that they are safer, in addition to the old market presence and the large number of its branches in comparison with others, which he gave to them. a large share of the market at the expense of other companies, as well as the weakness of insurance awareness and the consideration of some that insurance is prohibited by Sharia.Some consider insurance a luxury and not a necessity.

Among those reasons are low incomes with high poverty rates, which means there is no financial surplus to be paid on insurance premiums, and the small capital of many companies, which hinders their geographical spread and costs. for insurance awareness; For this reason, it relies on the role of the Egyptian Insurance Federation, established since 1950, to play this role.

If the total capital of the companies amounts to 13.4 billion pounds, then the two government companies earn 7.5 billion pounds, respectively Misr Insurance and Misr Life Insurance, where Sharq Insurance and Egyptian Risigurance merged with Misr Insurance in 2007.

For the 39 private companies left less than 6 6 billion, so the maximum capital of a private company was 9 339 million, milionë 55 million for one company, milionë 60 million for six companies and milionë 100 million for six other companies.

Thus, the two government companies continued to dominate the largest share of the rest of the indicators, as their share was 66% of the total capital of insurance companies, 53% of investments and 51% of corporate assets.

During the last fiscal year 2020/2021, five companies suffered losses, which are AXA worth 6 146 million, Sufficient Life me 38 million and Cheb Hayat 20 20 million, fulfilling life insurance with milionë 9 million and assets. for life insurance of around milion 1 million.

Corona and inflation add to the troubles of companies

Over the past two years, insurance companies have faced the consequences of the Corona virus, which has increased the value of indemnity paid by companies’s health insurance branches, as a result of rising costs of treatment and medical supplies. The crown caused a lack of financial surplus for the public, which made it difficult to purchase insurance policies.

However, the Corona problem has increased the demand of individuals and families for medical insurance, especially with the high cost of treatment, the high cost of laboratory services and radiology centers, as well as the increased demand for life insurance companies.

Currently, commercial insurance companies are facing the problem of inflation, which increases the cost of vehicle parts, forcing them to pay higher costs for cars affected by accidents, as well as rising prices for machinery parts, which means to pay a higher cost for machinery compensation. , and higher prices for medical and other services.Insurance increases their prices.

However, banks that raise interest rates to counter inflation benefit insurance companies from getting higher returns on their bank deposits, and insurance companies increase the value of policy premiums, which boosts their profits.

In the face of the disruptive democratic climate, the Financial Supervisory Authority took advantage of this and in cooperation with the Egyptian Insurance Federation expanded compulsory insurance models, including the establishment of a compulsory car insurance group in 2019, and the establishment of 300 pounds during the issuance of the passport and the allocation of this value for travel insurance, which allowed it to deal with 22 million people with passports and generate considerable income.

It also set aside one hundred pounds a year during the renewal of contracts for Egyptians working abroad, in exchange for insurance against them against death, and a pledge to transfer the body to Egypt in the amount of one hundred thousand pounds per person.Experimental, during which cases increase in layoffs.

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