CAIRO: Egypt’s still-nascent insurance market faces, among other challenges, poor highway safety, an outdated pension system and low awareness among the nation’s poor and middle class, according to panelists speaking at the Euromoney Egypt Insurance conference Tuesday.
The one-day conference, sponsored by the British financial magazine Euromoney and featuring a range of private and public sector officials, was held to discuss the opportunities and challenges facing the Egyptian insurance sector.
Despite recent growth, Egypt is a largely uninsured society. Last fiscal year, the sector accounted for just over of 1 percent of the country’s gross domestic product.
Private sector involvement is still somewhat limited as well. The industry is dominated by the state-owned Misr Insurance Company, which controls over 45 percent of the market, according to a report published by local economic newspaper Al-Mal yesterday. Allianz, Misr Insurance’s closest competitor, controls just over 7 percent.
Among the foremost challenges to the effort to get private companies more involved is Egypt’s notoriously poor road safety. According to information provided at the conference, the proportion of losses to earnings for motor accident insurers in Egypt was 316 percent last fiscal year – still high, though down from 841 percent the year before.
“Roads in Egypt are not safe under any international standard, nonetheless, no one can deny that roads in recent years are being taken care of, said Abdel Moneim Seoudi, chairman of the Egyptian Automobile Manufacturers Association.
In 2007, the state enacted new traffic laws, aimed at minimizing the “human error that causes accidents, said Sherif Goma, an assistant to the Minister of Interior.
Panelists differed on what to blame for the number of auto accidents in Egypt, highlighting the depth and complexity of the problem.
“It is the driver who is mainly responsible, said Adel Hammad, chairman of Misr Insurance. “But we can say the driver, the road, the vehicle, the law – each of these factors is dependent on the other one.
Goma agreed that Egyptian drivers must be taught to drive more carefully. “The driver has to be groomed and disciplined, he said. “We have been feeling recently that the driver should get some attention and should have his awareness of traffic laws upgraded.
Until the late 90s, four state-owned firms controlled the Egyptian insurance market. Over 20 private firms have since entered, as authorities have begun to liberalize and renovate the market.
There is still some way to go. The pension system, in particular, needs updating, particularly given the increasing life expectancy and growing population here, said Hesham Ramadan, deputy chairman of the Insurance Holding Company, a body established in 2006 to restructure the state-owned insurance companies.
The average lifespan for an Egyptian man in 1937, for example, was just over 35 years. It is now about 70.
Assuming a retirement age of 60, the system will need to be refurbished and expanded to accommodate the growing number of claimants this will cause, Ramadan said.