Experts said the engineering insurance sector reported a decline in FY 2011/2012 because of the economic turmoil Egypt witnesses as many factories were closed and projects were stopped. However, the slight growth the sector achieved was based mainly on electricity plants.
Ahmed Morsy, head of general committee for engineering insurance at Insurance Federation of Egypt and general manager of technical affairs at Egyptian Takaful Insurance (property), said engineering insurance sector was expected to witness a noticeable decline in the current FY 2011/2012, because the volume of investments was decreased in Egypt after 25th of January revolution. Engineering insurance sector declined the most because it depends mainly on large projects and factories that were stopped after the security lax and economic recession that followed the revolution. However, engineering insurance sector is expected to grow slightly in the next fiscal year as political and security statuses will be stabilized after the presidential elections, Morsy added.
Engineering insurance in Egypt has enough insurance coverage and products to grow, but in stable conditions when large projects and companies are being established, Morsy noted.
Ahmed Abdel Megid, member at general committee for engineering insurance and head of issuance department at Mahandes Insurance, noted that engineering insurance sector retreated due to lack of liquidity with contracting companies, making them unable to establish new projects or inject new investments. This has caused harm to all insurance sectors not engineering sector only. Megid hoped political and security stability to return in Egypt, so as to encourage businessmen and that will make engineering insurance sector grow again. Engineering insurance sector at Mohandes Insurance Company did not sharply decline. Megid expected engineering insurance sector to witness a slight growth in the next two months as there are many insurance policies that will be renewed.
Marwa Abdel Salam, member of general committee for engineering insurance in Insurance Federation of Egypt and general manager of energy department at Chartis Insurance-Egypt, said engineering insurance sector did not decline noticeably in the current fiscal year. The sector was expected to decline more noticeably as there were no new projects or companies because of lack of liquidity with investors. However, electricity plants in the Egyptian market contributed in the slight growth in the engineering insurance sector, Abdel Salam noted.
Abdel Salam added that engineering insurance sector at Chartis has increased a little bit in the current FY 2011/2012, expecting it to grow more when businessmen return to invest in industrial projects.
It is worth mentioning that the direct premiums in engineering insurance sector retreated by 16.8%, registering EGP 546.486 million in FY 2010/2011, compared with EGP 656.850 million in FY 2009/2010, according to the annual statics book published by Egyptian Financial Supervisory Authority about Insurance market in Egypt for the year 2010/2011.
The compensations paid by engineering insurance departments in Egypt grew by 62.8%, registering EGP 212.086 million in FY 2010/2011, compared with EGP 130.299 million in FY 2009/2010.