Head of the Egyptian Insurance Federation Abd El-Raouf Kotb said, “Establishing new Egyptian re-insurance companies is an issue of national security.” He revealed that foreign re-insurance companies receive 70% of the insurance installments paid in Egypt.
He added that most of the insurance certificates concluded between insurance companies and clients – whether insuring factories, banks, aircrafts, or gas pipelines in petroleum companies – are partially held in foreign re-insurance companies. The aim is to distribute risks, so companies in Egypt save a percentage of the installment, while the remaining amount is returned to the foreign re-insurance company. According to Ahram Online, Kotb stated, “The re-insurance companies pay a percentage of the compensation to clients as agreed in contracts and based on the value of installments receipted.”
He noted that the Egyptian Insurance Federation, in cooperation with the Egyptian Financial Supervisory Authority and the Insurance Holding Company, undertook several steps to encourage establishing new re-insurance companies in the Egyptian market with a paid capital of $250m. The Federation contacted all insurance companies to check their interest in being part of the new company: “The contributions will be assessed later and the door will be opened for bank’s participation.”
In 2007, the Egyptian Re-insurance Company was merged with Egypt’s Insurance Company, forming a department of re-insurance. The former Head of the Egyptian Re-insurance Company said, “Establishing an Egyptian re-insurance company is not easy. A robust company has to be established to compete in international markets. As a result, the company may receive a credit rating higher than that of the state.”
He emphasised the need to consult international firms while running feasibility studies for the new company. He added, “The insurance companies in Egypt prefer to deal with foreign re-insurance companies since they view Egypt’s Insurance Company as a competitor. Therefore, an independent re-insurance company has to be established to attract the insurance companies’ installments inside Egypt.”
Translated from AlBorsa Newspaper