Bearing Uprising Compensations Fostered Clients’ Confidence in Egypt’s Insurance Firms
Completing Policyholders Protection Fund Of Insurance Firms Bankruptcy Early Next Fiscal Year
Approving To Grant New Insurance License To One Of Firms And Financial Solvency Inevitable To Work In The Market
EGP 7.7 Billion Total Compensations Of The Last Year.. EGP 11 Billion Total Premiums
Dr. Ashraf El Sharkawy, Chairman of the Egyptian Financial Supervisory Authority ( EFSA), has asserted that insurance sector has carried many Compensations and risks as result of riots and unrest in Egypt over the last two years because of the security chaos which contributed for the increasing of the clients’ confidence in insurance sector, and it also led to growth of premiums volume amounted at 8.7% up to EGP 11 billion by the end of last June.
El Sharkawy added to Amwal Al Ghad, that (EFSA) will finalize the policyholders protection fund before the end of this fiscal year in order to preserve the clients’ rights from insurance companies’ bankrupt explaining that the fund will separate between life insurance and property due to the differences of activities.
All The Economic Sectors Affected Within The Last Two Years With The Political And Security Turmoil Does That Affected The Insurance Sector?
The insurance sector is among the political and economy life in Egypt which has been affected largely during the last two years.
The Insurance Sector is not separated from Egypt’s political and economic life which it affected largely within the last two years due to political and security turmoil, most of the clients did not obtain the coverage of riots and civil unrest despite the decrease of the financial value, the EFSA has held an intensive meetings with the Egyptian Insurance Federation which resulted in the companies bearing for risks and compensation to clients and give it many advantages over the last period.
What Are The Advantages Which Have Been Achieved By The Insurance Firms To Pay Riots And Unrest Compensation?
The Insurance Companies have endured all risks which followed by 25 January revolution regarding a significant increase of the investments volume and earned premiums for Insurance companies within the last fiscal year of 2011-2012, as result of the clients’ confidence of the sector and ensuring its ability to compensation in the case of the risk will occur.
Which means to guarantee their rights fully, and this contributed to increase the gross national product (GNP) through the companies’ invest to the collected insurance premiums in various fields, which have benefits on the Egyptian economic generally and on insurance particularly.
What Are The Major Insurance Sectors Affected By The Recent Events?
The auto insurance sector is considered to be the most affected sector by the recent events as result of increasing the losses and compensations due to theft, robbery and accidents cases that the Egyptian society has witnessed over the last two years, therefore many companies are thought to halt this sector but with a decision to assume the client 25% of compensation, or increase 50% fees about theft cases or rising net worth of insurance companies, as the companies declined for this idea, especially with the increasing of clients’ demands on the insurance of their cars as result of the companies paid compensations .
What Are The Main Results Of Insurance Sector In The Fiscal Year 2011-2012?
The previous fiscal year has witnessed a growth in the volume of compensation as the sign of the companies’ honesty with the clients, the total compensations paid are about EGP 7.7 billion by the end of the last June compared to EGP 5.8 billion within the last fiscal year with 32.8% boosting, the insurance companies which affiliated to the public business sector have seized 60.3% of the total market compensations.
The total premiums of insurance companies have reached around EGP 11 billion in 2011-2012 compared to EGP 10.1 billion during the fiscal year with 8.7% increase, as the insurance companies which affiliated to the public business sector have reached 48.4% of the total market premiums While the private sector companies have reached 51.6%.
What Is The Total Volume Investment Achieved By June-End?
The total investments of insurance companies have been boosted to EGP 38.6 billion in 2011-2012 compared to EGP 35.3 billion within 2010-2011achieving 9.4% growth rate.
The net profit of investments have increased to EGP 3.3 billion in the last June 2012 compared to EGP 2.7 billion in June 2011, achieving 22.1% raising rate, which means that the increasing not only in the investments amounts but also in the achieved returns of it.
While the total investments of the private insurance funds reached EGP 32.3 billion in June 2012 compared to EGP 29.6 billion during 2010-2011, with 9.2% boosting, Despite the net profit of these investments funds up EGP 2.9 billion in 2011-2012, compared to EGP 2.7 billion within2010-2011.
How Do You See The Insurance Pools Role To Promote The Sector In The Coming Period ?
There are two pools in the Egyptian market one for trains, underground-metro and highways insurance and the other for constructions hazards, no one can deny their roles in compensating customers, as the first pool has compensated recently the victims of Assiut and Badrasheen train tragedy along with paying compensations for trains and highways’ victims, the compensation costs of all these accidents reached EGP 80.4 million in the last June.
As well as the reported accident insurance provisions that had no action whether for lack of documents or for not demanding compensation, the provisions reached EGP 71 million.
Is There Any Intention To Establish Other Pools Within The Coming Period?
It is possible to establish more insurance pools, but we must take into consideration to include all the firms specified in providing the same insurance services for certain risks. And this according to law provisions, supervision and control over the issued insurance Law no. 10/1981, there are some proposed risks to establish pools notably natural hazards, despite we move away from the earthquake belt, but it is still studied, but we miss the insurance culture of customers.
A large segment of clients tend to insurance pool against construction risks in order to obtain the necessary licenses, but when the clients build their houses they never think to go to secure them.
The Insurance Sector Is Still Suffering From ‘Price War’ Phenomenon, So What About The EFSA’s Role To Reduce It?
According to the International Association of Insurance Supervisors (IAIS) principals, it is not the role of Sgt to interfere in insurance prices, so insurance-tariff has provided but it cancelled when we found that the market contributes to regulate and control itself, as when we evaluate the prices actuarial, we will find the rights policyholders protection affected by the financial statements of the companies in case of war price, therefore we should warn the companies.
Furthermore, in case of announcing these specific prices the (IAIS) will endure the risks with the companies, this is difficult to apply but our role is to revise the prices and financial actuarial statements and to preserve the rights of policyholders and shareholders.
What Are The Consequences Of The EFSA’s Precautionary Statement To Stop Dealing With Health-Care Companies “HMO”?
A jointly meeting has held with the health -care companies, and it is agreed that insurance companies are the only concerned to bear risks, whereas the role of health care companies confined to manage the provided medical services with TPA system, some proposals have been offered during the meeting, and still studied and discussed.
Do You See That Insurance Supervision And Control Law No. 10/1981 Needs Amendments In This Period?
This law will be actually amended after the license law of operating companies will offer, which will grant the Egyptian Financial Supervisory Authority (EFSA) the right to monitor the financial solvency and sanctions, to be unified in all markets and non-banking financial instruments, especially we suffer from the differentiation of authorities between these companies.
Moreover, this law will grant an article to establish special federations by brokers and capital market authorities between these companies, which led to regulate the market without needing for legislative amendments, as well as organizing Takaful Insurance Market, determine surplus mechanisms and how to distribute it to policyholders.
What About The Acquisition Of Delta Holding Lebanese Insurance On Solidarity Takaful Egypt ?
The company has completed all its paperwork as the acquired ratio to be more than 10%, amounting to 99%, has sent to the cabinet and ‘re still waiting for a response, but Solidarity has been addressed to halt the new documents and underwriting capabilities due to lower financial solvency, and not completed the authorized capital of EGP$ 60million, and paid only 40 million.
The new policyholder protection fund is seeking to avoid the unpleasant results plagued by the clients due to the insurance firms’ bankruptcy.
This fund is seeking to protect and preserve the clients ’ rights and policyholders, from the bankruptcy of insurance companies, or exposure it to risks which threaten its financial solvency, it will increase the confidence between the insurance activities and customers and the high volume of business companies.
Mohamed Meit, the Vice-President of (EFSA), has demanded to finalize this fund in early the coming fiscal year of 2013-2014, and it is scheduled for the fund to divide into two accounts the first for life insurance companies and the other for General Insurance companies and properties, due to diverse nature activity of each company.
When Will The Egyptian Association For Cooperative Insurance Re-Issuing Insurance Policies?
The Association has completed some of its acquired paperwork and mechanism including administrative structure and the electronic system, and they are in their way to implement the rest of procedures, in order to assess their performance and results by the end of the current fiscal year, to determine the possibility of re-issuing these policies in some insurance sectors.
Did EFSA Receive Any Requests From New Insurance Companies In Order To Enter The Egyptian Market?
There is one company which presented a demand to obtain license during this fiscal year and it actually has obtained the preliminary approval from 3 months ago, so in order to grant new licenses, the companies should be strong financial solvency, its capital up EGP 100 million, along with providing Products and new insurance coverage serving the Egyptian market , so as to face the current competition with the existing companies in the market within this period, without referring to War price Phenomenon to snap up clients.
