Africa: Promising Potentials, Micro Insurance Backs Growth Rates
Lack of Legislation is one of the Most Prominent Obstacles facing Insurance Growth in Africa.
Federation Conference in Beijing will be held in September to discuss the Technological Uses in the Sector.
3 New Branches for Iskan Insurance, EGP 75 Million Targeted Premiums by end of June
Hammam Badr, secretary general of the Federation of Afro-Asian, Chairman and Managing Director of Iskan Insurance Company, has revealed that the African markets have witnessed a remarkable development within the last years in the countries of Ethiopia, Ghana, Kenya and Zimbabwe. This has occurred despite the decline in the volume, entities and economy of these markets, but it has expertise and good human cadres in the sector. He explained that that South Africa is one of the most prominent insurance African markets because it dominates foreign companies in this market.
Badr added to Amwal Al-Ghad that there are many obstacles which face the growth of the insurance market in the African markets including lack of legislation and colonialism’s control of those markets for many periods. The classification of the operating companies in those countries will contribute in achieving growth as well as exchanging experiences between the different markets.
He has emphasised that the Afro-Asian federation has had an effective role in activating this exchange within establishing private insurance pools, exchanging with the African and Asian countries in various insurance sectors that contribute to the growth of African countries Insurance.
How do you see the Insurance Sector within Africa during the Current Period and what are the Most Prominent Markets?
The African markets have witnessed a remarkable development within the last years in many countries such as Ethiopia, Ghana, Kenya, Zimbabwe, despite the decline in the volume, entities and economy of these markets, but there are expertise and good human cadres in the sector.
This is despite South Africa being one of the most and prominent axes in the Africa insurance market due to the change of rule as a result of colonialism, which led to more technical aid and investment. In addition, the located companies in South Africa are all branches of foreign companies which give it sufficient experience not only in insurance but also in all fields.
What are the Main Challenges and Obstacles facing African Insurance Companies?
The most prominent challenges that face the African insurance market are represented in the lack of legislature, which hinders the insurance sector from achieving deep prosperity in Africa and increasing mutual cooperation among all African countries, as there are a lot of African countries affected by European colonisation. This contributed to the difficulty in exchanging experience between different insurance companies in Africa; we hope to eliminate these difficulties within the coming period in order to increase the capacity.
The African countries depend on loans from the foreign institutions in the insurance field, which has led to many problems in these markets but we can overcome these obstacles through the credit rating of insurance companies.
The African markets are divided into two different directions, the first being the private French school, while the second is represented in the English school, which had a positive impact on the cooperation of African countries to exchange experiences.
What are the Prominent Insurance Programmes that have achieved Success for the African Markets during the Current Period?
Micro insurance programmes are the most important experience to have proved its success in African countries, including Kenya and Ghana; we can make the best use of this experience and apply it in co-operation with the World Bank, which had a successful experience with some countries when it provided the aid to establish consolidated insurance against disasters and natural hazards.
The government has been able to compensate housing damage cases which resulted from earthquakes valued at $ 10.000 aiming to focus on the citizen’s income, the project which protected the residential areas from earthquake has achieved a great success as a large earthquake led to huge losses for victims and this fund was a lifeline for them, from whose services they have greatly benefited.
The fund has been a good factor in the economy in general and the insurance sector in particular; one of the successful experiences was ‘agricultural insurance’ which has greatly developed recently in Africa.
Is it possible to Benefit from these Experiences and apply them in the Egyptian Market?
Egypt is able to make the best use of these experiences, as these projects are considered to be a phase of development and growth for the national economy, especially given that most developed countries started with similar conditions to ours, such as China which is considered to be a successful experience in all fields, and also India, Cuba and Brazil, despite slow progress, but contributing to achieve success.
Moreover, there are many experiences in many countries which we can make the best use of it, but we are in need of a good system, correct planning and future view.
What is the Status of Egyptian Insurance compared to the African and Asian Markets?
In the early 1960s, the Egyptian market differed from the Malaysian and Indian markets, despite the similarity of features between them. The Egyptian insurance sector was much better then, but the situation is different now, as the Asian countries are currently having a high-tech boom, such as Malaysia, China and India with access to the European market.
The Gulf market witnessed its initial breakthrough through the Egyptian experience which completed its march in the Gulf, achieving a remarkable development in insurance, trade and industry fields.
What is the Role played by the Afro-Asian Union Insurance for the Exchange of Experience between the Member States?
The Afro-Asian Union has created co-operation between the developing countries in African and Asian continent, exchanging experience between them in the insurance sector, which will contribute to underwriting capabilities including African insurance pools, such as a pool subsidiary to the Afro-Asian Union, together with a pool subsidiary to aviation aiming to exchange aviation operations.
The sub-goal of Afro-Asian activities is to arrange conferences every year, and hold an annual meeting with workshops, training sessions, mutual meetings and exchange of technical experience. A new document will be discussed through the client’s perspective which will be contributed to increase awareness and how to deal with the risks.
What are the Developments that will be witnessed by the Afro-Asian Union within the Coming Period?
The Union has a website which includes an overall database for African and Asian companies of their work, to exchange experiences and work together, but we intend to provide demand for all companies within the coming period in order to obtain a special budget, to reach the generated premiums’ volume of African and Asian markets. We hope to complete this step within the next five years, as well as secret numbers for each company will be prepared in order to facilitate the required information, the availability of new products to exchange experiences and insurance products.
Is there any Conference scheduled to be held by the Union soon to exchange Experience between Markets?
The Union held its last training in April concerning agriculture and micro-insurance to contribute in exchanging experience between the countries in this type of insurance. The meeting is scheduled to be held in Beijing next September, so as to discuss the technological uses in insurance sector and review India, Malaysia and China‘s experiences in the insurance sector.
Do you believe that the Establishment of the 40th Conference of African Insurance Organisation in Cairo is considered to be the backbone of Egypt-African Co-operation?
The current Insurance Federation of Egypt will establish an African Insurance Conference in Cairo for the second time within 40 years. Egypt could restore its effective position in African insurance; the obstacles we have we experienced over the last 30 years resulted from neglecting an effective role for Africa commercially, industrially, and agriculturally, as well as energy sources.
We hope to put new policies which enable us to penetrate Africa again and restore our position of it, especially with the deconstruction policy to dominate energy sources in Africa as most of Africa Countries are small state-lets.
The prevailing thought of the West is the lack of advancement of these state-lets and their deconstruction to acquire them politically and economically.
How do you assess the Economic and Political Situation in Egypt during the Current Period?
The political situation is the main engine of the economic sector and the current political unrest has contributing to a deteriorating economy and a blurred situation appears for the future phase.
Egypt’s administrators are currently determining the true path for Egypt, which will contribute to the general economic recovery and generate interest in the insurance sector in particular. The political unrest has led to the exhaustion of the Egyptian economy, high inflation rates and lower production as well as security chaos on the Egyptian street, in addition to our usual problems such as education and health, that have contributed in the public budget deficit and our resorting to the International Monetary Fund (IMF) and international institutions.
Decision-makers should put a future vision in all economic fields especially insurance along with our trend for establishing an insurance entity against natural hazards with a future vision. There is a great possibility for the emergence of such dangers in Egypt within the coming period, as there have recently been four earthquakes. The most affected areas are Sharm al-Sheikh and North Sinai due to their tourist and economic wealth being adversely affected should natural disasters recur during the coming phase.
What are the Most Prominent Strategies of Iskan Insurance Company in the Coming Period?
The current economic vision is a foggy vision especially within the conditions experienced by the country and the devaluation of the Egyptian pound compared to the increase of the other foreign currencies and its impact on the inflation rate causing crises to insurance companies. Additionally, there is a new problems with re-insurers abroad, and it is hard to predict what strategy plans there will be until the political and security stability will return which will reflect positively on the whole economy.
We hope that the coming phase will witness prosperity in the various areas of the economy in general and insurance in particular.
How much are the Targeted Premiums in Iskan Insurance Company within the Current Fiscal Year of 2012-2013 ?
The company aims to achieve EGP 75 million by the end of June, achieving about 95% of the targeted plan until now, and this is a good result in a short period for the company in the Egyptian market which began its actual activity in October 2010 with licensed capital up EGP 150 million, 50% has paid around EGP 75 million.
The company’s assets have doubled since its establishment to reach EGP 100 million with a rate 100% due to the balance obtained between the company’s insurance portfolio and investments for the company’s commitment to its obligations towards policyholder.
Does the Company intend to expand Geographically within the Coming Period?
We have geographic expansion planned through the opening of three new branches during 2013, and including the Nasr City branch scheduled to open in next July along with two other branches in the Delta and Suez Canal zones.
Furthermore, we hope to expand through one of the Upper Egyptian cities, within the government’s trend to develop southern Egypt, in addition to our hopes for the political and economic conditions so as to achieve this plan.
