Egypt strives for a second chance
Insurance funds at LE40 bn awaiting optimal usage
Egyptian insurance set to introduce new products
By Islam Abd El-Hameed and Al-Zahraa Moustafa
Insurance companies in Egypt are fully able to cover local and foreign investment, experts say. Insurance services can certainly help stimulate investment in Egypt which is currently experiencing political upheaval. Investors therefore are seeking contracts that will secure their interests to the utmost.
Egyptian insurance companies intend to work with big-name firms to support direct foreign investments with a strong liquidity position, thus reviving investor confidence, which in turn will boost the economy.
Mohammed Maait, vice chairman of the Egyptian Financial Supervisory Authority (EFSA) said insurance companies have been given maximum flexibility to serve the needs of existing enterprises and contribute to new investment in Egypt in view of the political developments within the country.
Insurance companies have been offering coverage options that had not been in demand before the 25 January Revolution in 2011, Maait said. The ‘Political Violence’ policy has added to the diversity of insurance services for business in times of political turmoil, he added.
The EFFSA readily endorses new insurance coverage services in willingness to reassure foreign investors in Egypt, he said.
“Foreign investments in Egypt play a crucial role in reviving the national economy in general and the insurance sector in particular,” he added.
The insurance sector provides ‘Private Insurance Funds’ to attract foreign investors. Investment in these funds reached LE40 billion on 30 June 2013. The EFSA is implementing legislative structure reinforcement in order to make the best use of these funds.
Maait unveiled EFSA plans for a law draft on higher returns from the special insurance fund investments. The EFSA intends to put in place regulations to bolster the Egyptian economy and boost growth in the insurance sector.
Abdel Raouf Kotb, managing director of the Egyptian Saudi Insurance House (ESIH), also highlighted the role of the insurance industry in supporting the Egyptian economy and national investments. ESIH provides financial protection for individuals and institutions involved in mega-projects and businesses in Egypt.
According to Insurance Law10/1981, foreign investors in Egypt must use to local insurance companies to protect their businesses here, Kotb said. Egyptian insurance firms are capable of protecting foreign investment in Egypt will all insurance coverage services.
Egyptian insurance firms are ready to study foreign investors’ proposals to provide coverage services that are not yet available in the Egyptian market, Kotb added. Insurance firms will discuss such proposals and work to meet all investors’ needs. The Egyptian economy, local insurance firms and investors would therefore enjoy more benefits, Kotb said.
Bearing in mind the compensation paid out by insurance companies in response to damage and losses incurred in recent political unrest, insurance companies have introduced new products, he added.
The new ‘Political Violence’ policy covers all existing businesses at affordable premiums, which should attract foreign investors in Egypt, he said.
Alaa el-Zoheiry, managing director of Arab Misr Insurance Group (GIG Egypt), said the Egyptian economy is on the road to stability at a steady pace so that it would eventually attract new foreign investments again. Many indicators suggest that economic recovery is on the way, he added, referring to economic growth at 2.2 per cent and $12 billion in aid from the Gulf countries, which have helped stabilise the foreign exchange market.
El-Zoheiry underlined the importance of guaranteeing social justice as well as safety and security for investors in Egypt for the sake of economic growth and investment. The insurance sector is playing a vital role in achieving economic and investment growth by providing adequate insurance cover, he added. Egyptian insurance firms must work hard to offer attractive competitive products to meet with needs of foreign investors.
The insurance sector also assesses potential risks to various enterprises and suggests the best means to reduce risk, el-Zoheiry said, adding that the insurance sector had coped with recent events with the introduction of the ‘Political Violence’ policy – a clear example of what the sector can do to give investors in Egypt the best protection.
El-Zoheiry called for amendments to Insurance Law 10/1981 to enable insurance firms to direct part of their investments to found new firms and investments, which will raise GDP and encourage foreign investment in Egypt.
Medhat Saber, deputy managing director at Royal Insurance Company, said an investor is always looking for safe investments which minimum risk to foster a healthy environment for his businesses with the help of insurance firms.
“And this exactly is what Egyptian insurance firms do by providing all the necessary policies,” he added
Banks and insurance are the backbone of a strong economy, he said, adding they are best able to lure investors as banks adequately fund investors while insurance firms put investors’ minds at rest at reasonable cost.
Egyptian insurance companies provide 90 per cent coverage services that are found in the global markets, he said, adding that any new insurance policies introduced by foreign firms must be reviewed in terms of local market needs. The authorities give their approval and coordinate with foreign re-insurers for the eventual launched in the Egyptian market.
Adel Shaker, chairman of the Egyptian Insurance Brokers Association (EIBA), said the insurance sector has always supported new investments by providing protection coverage options. When fresh investment is made in Egypt, a new policy is issued in accordance with the type of the new businesses, Shaker added.
In their bid to attract new foreign investment, insurance companies offer cover for foreign investments in Egypt in accordance with regulations set by international insurance firms, thus reassuring foreign investors in Egypt. A developed insurance market and dealing with well-known global insurers are key elements to attracting foreign investments, Shaker said.
Insurance firms helping to establish new businesses in Egypt is an important investment channel for companies seeking to invest in policyholder funds, Shaker added.
This will boost foreign investor confidence with high returns since the contribution of an Egyptian-based firm in foreign investments reassures the investor, he said.
