Recovery Of Bancassurance Service Is Subject To CBE’s Approval

Three insurance companies only were conducting bancassurance activity for more than five years in Egypt. Insurance experts criticized limiting bancassurance service to three companies, saying such activity benefits the two parties in the transaction, as issuing policies through banks will increase insurers’ premiums and banks’ commissions.

Implementing Basel II Accord to banks necessitates conducting bancassurance service which insures against lending and investment risks, experts noted, adding that the Central Bank of Egypt (CBE) is the one who resists activating this service which would increase the volume of insurance transactions when implemented.

Bancassurance service is provided through agreements and protocols between insurance companies and banks, covering both individuals and companies.

Sadek Hassan, chairman and managing director of Misr Insurance Life, said the Insurance Federation of Egypt (IFE) has submitted a memorandum to CBE, requesting reimplementation of bancassurance service, but CBE did not reply till this moment.

Hassan criticized CBE that insists that a bank shall acquire 51% stake in the insurance company in order to be able to offer such service. Misr Life Insurance’s paid-up capital reached EGP one billion and the volume of received premiums registered EGP 1.6 billion, he added, wondering if a bank would have such stake in that large company.

Ahmed Shoukry, managing director of Suez Canal Life Insurance, said insurance companies are qualified and ready for providing bancassurance service in the current period, assuring that such service would benefit banks, insurance companies and insured customers.

Bancassurance achieves mutual benefits, Shoukry affirmed, as banks are in need for such a unique insurance service and insurance companies require attracting a new customers segment, adding that this would raise the state’s GNP. He expected the financial results of insurance companies to post good results after implementing bancassurance service. He refused the intervention of banks in insurance sector through acquiring ruling stakes in insurance companies, which is the rule conditioned by CBE for implementing bancassurance. Banks are making technical mistakes in insurance services affecting both customers and insurers. He called on CBE not to insist on this condition for the common good.