Insurance operators join in fierce price wars

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CAIRO: The national insurance market has entered into a new phase of price wars between companies amid charges launched against regulators of neglecting the perilous impacts of price competition on the insurance activities.

Elhamy El-Kady, general secretary of the Insurance Federation of Egypt, told reporters last week that the majority of companies have joined in fierce price competition, dropping technically fair prices by underwriting schemes at values larger than the value of premiums.

“Such deregulated competition will probably threaten the industry performance with claims rising to unaffordable levels compared with insurers’ future reserves, he warned.

For his part, a senior official at state-owned Al Chark Insurance Company, Fathy Abu Mira, blames the Egyptian Insurance Supervisory Authority for the price war, which has engulfed the insurance market, including the aviation and petroleum sectors.

In response, the head of supervision at EISA, Hosny Hamed, said the industry’s regulatory authority would crack down on insurance companies to end the price dumping, as prices fell to levels inappropriate with risks. He articulated the role of EISA to protect policyholders, whose rights will ultimately be threatened by this competition.

Hamed added that EISA has begun to develop a number of measures, designed to eliminate the price war and to calm down the intensity of deregulated competition.

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