Egypt’s Insurance Industry: Economic Stability and Promising Future
Updated 12/17/2024 8:00:00 AM
The insurance system in Egypt plays a pivotal role in the country's economic framework, providing essential coverage across various sectors to both individuals and corporates.
The economic impact of the insurance sector in Egypt is profound, as it mitigates risk and enhances financial stability, particularly for small- and medium-sized enterprises (SMEs). Insurance provides a safety net, fostering a conducive environment for business growth and innovation.
A Snapshot of Egypt's Insurance Landscape
Egypt’s insurance system covers multiple areas, including property insurance to protect physical assets, liability insurance to safeguard individuals and businesses from legal claims, and personal insurance to address health-related expenses.
In 2023, the Egyptian insurance market witnessed a 30.4% year-on-year (YoY) growth in total turnover, which reached EGP 74 billion ($2.38 billion). Non-life premiums surged by 57.9% to EGP 37.5 billion ($1.2 billion), while life underwriting increased by 10.6% to EGP 36.5 billion ($1.18 billion), according to Egyptian insurance market: 2023 results published by Atlas Magazine last March.
Insurance premiums contribute less than 1% to the national gross domestic product (GDP), as mentioned by Mohamed Farid, Chairman of the Financial Regulatory Authority (FRA), at the Insurance Federation of Egypt’s (IFE) annual conference last November.
“Egypt’s insurance system is undergoing a transformative double-digit growth in both life and non-life segments. Despite its underdevelopment and low penetration rates, ongoing reforms are fostering innovation and competition,” economist Ali Metwally tells Arab Finance.
In July 2024, the FRA partnered with telecommunications companies to expand insurance inclusion in Egypt. “This partnership aims to improve insurance services through retail outlets, facilitating greater consumer demand,” Nirmeen El Sayyad, a UN Women project manager at the American University in Cairo (AUC) and an economic expert, says.
“These efforts enhance financial inclusion by allowing insurance companies to promote their services in telecom stores,” El Sayyad explains.
In this regard, the FRA reported that the total compensation paid by Egypt’s insurance sector amounted to EGP 31.5 billion in the first nine months of 2024. Of this, EGP 15 billion was for property and liability claims, and EGP 16.5 billion was for individuals and capital formation.
At the end of September 2024, premiums collected for property and liability insurance activities amounted to EGP 38 billion, while premiums collected for personal insurance and capital formation activities totaled EGP 30.9 billion, according to the FRA.
Insurance helps mitigate risks in several industries in Egypt. Metwally says, “For businesses, it protects against property, liability, and operational risks, ensuring stability amid volatile economic conditions.”
“For individuals, life, health, and motor insurance offer financial security, especially during periods of economic uncertainty,” he adds.
“The expansion of agricultural insurance to protect farmers from climate risks and the introduction of universal health insurance highlight the industry's efforts to address both traditional and emerging challenges, such as climate change and rising healthcare costs,” according to Metwally.
Moreover, SMEs highly benefit from insurance in managing risk, as it provides financial protection, boosts productivity, and improves access to financing. However, many SMEs, especially in developing countries, remain underinsured or uninsured, according to the International Labor Organization (ILO).
A Promising Future for the Sector
The Egyptian insurance sector’s outlook appears promising, driven by regulatory reforms, economic growth, and increasing consumer awareness.
On July 15th, President Abdel Fattah El-Sisi signed Law No. 155 of 2024, the Unified Insurance Law. As per El Sayyad, “This law aims to streamline and modernize insurance practices in Egypt."
The sector is expected to grow in the next three to five years. Metwally explains, “Egypt’s large youthful population, growing urbanization, and rising middle class are expected to boost demand for insurance products.”
“Economic reforms, such as the privatization of state-owned insurers and the implementation of the International Monetary Fund (IMF) program, are set to drive competitiveness and attract private and foreign investments,” he highlights.
Additionally, he illustrates, “The expansion of Insurtech and mobile-based sales channels will make insurance more accessible and improve customer experience, fostering broader market penetration.”
“Diversified offerings, such as microinsurance and takaful products, will serve low-income households and the predominantly Muslim population, unlocking new growth avenues,” Metwally indicates.
Yet, further development in the sector is needed to ensure a strong future outlook. To stimulate its growth, governments should harmonize regulations, provide necessary infrastructure, and incentivize innovative products for nontraditional sectors to increase customer engagement, El Sayyad suggests.
Meanwhile, Metwally says, “To enhance consumer awareness and trust, insurance companies can launch several strategic initiatives, including nationwide education campaigns to raise awareness about the importance and benefits of insurance, particularly in rural and underserved areas.”
He also notes that simplified, tailored products, such as microinsurance and affordable health plans, can tackle specific needs and increase accessibility.
Furthermore, digital transformation offers additional opportunities for the sector’s growth. “Leveraging digital platforms can streamline policy issuance, claims processing, and customer service, enhancing transparency and reliability,” Metwally clarifies.
He also explains that collaborations with banks, telecom companies, and community organizations can broaden outreach by utilizing existing trust networks.
As Egypt continues its economic development, the insurance sector will act as a vital pillar in mitigating risks, fostering financial stability, and driving economic growth. With ongoing regulatory reforms, technological advancements, and increasing consumer awareness, the insurance industry in Egypt is poised for significant growth and transformation.
By Sarah Samir
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