Arab Republic Of Egypt

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Arab Republic Of Egypt
Egyptian Insurance Supervisory Authority
Ministry of Investment
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• Recent Developments of Egyptian Insurance Market

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• Contents
• 1- Macroeconomic Outlook
• 2- Egyptian Insurance Market
• Insurance Economic Indicators
• Market Structure
• Market Overview
• 3- Reforms and Strategies

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1- Macroeconomic Outlook

• Egypt has rapidly shifting towards a
  market-based-economy, a transition that demands
  implementation of a considered economic policy.
  Hence , real economic growth takes place in an
  enabling environment, while macro- and
  microeconomic are rehabilitated.
• The following indicators summarize the main
  recent developments in the macro-economic
  framework.

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• Economic Indicators
• In the past 20 months, the reform program aimed
  at improving the investment climate, cutting of
  tax and customs tariffs as well as adopting laws
  to encourage investment.
• This led to an improved investment climate with a
  total foreign direct investment USD 3.9 billion
  in 2004 / 2005 against USD 2.1 billion 2003 /
  2004 .
• Foreign direct investment increased in the last
  two years reached 4.22 and expected to reach 5
  of GDP at the end of 2005/2006.
• Inflation was reduced to 3.7 per cent and GDP
  increased to 6 in the current financial year and
  expected to rise to 6.5 or 6.9 in 2006/2007

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Microeconomic Overview
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• 2- Egyptian Insurance Market

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• 1- Insurance Economic Indicators
• The international criterion for measuring
  insurance role in national economies is the
  percentage of insurance premiums as a proportion
  of Gross Domestic Product.
• As Egypts proportion is low compared to
  international levels, the Egyptian insurance
  sector is a promising opportunity for
  development.

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• The previous chart of development of premiums
  to GDP reflects the gradual increase in the
  contribution of insurance to the GDP.
• The Ministry aims to double this increase to
  match international levels. 

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2- Market Structure
Insurance Supreme Council
Egyptian Insurance Supervisory Authority
Insurance Companies
Auxiliary Organs
618 Private Insurance Funds
Insurance Federation of Egypt
Private Companies 3 Composite,5 Life, 8
Property
3 Governmental Funds
Cargo Supervision Surveying Office
5 Insurance Pools
1 Reinsurance Company
1 Cooperative For Small Enterprises
Insurance Studies Institute
3 Composite Public Companies
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• 3- Market overview

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•   Market Indicators
• Total premiums increased from LE 4.093 billion on
  30th June, 2004 to LE 4.478 billion on 30th June
  2005, up 9.4 per cent.
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• Total claims met by insurers in 2004/2005
  amounted to LE 2.777 billion up 40.3 per cent
  over 2003/2004, when LE 1.98 billion was paid
  out, a measure of the insurance industrys role
  in persevering national investments.
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• Shareholders rights in insurance companies
  amounted to LE 3.784 billion on 30th June, 2005
  compared to LE 3.467 billion on 30th June, 2004,
  up 8.1 per cent.

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• The insurance companies net profit reached LE 589
  million on 30th June 2005, of which the public
  sector share is LE 539 million 91.5 per cent.
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• Policyholders rights in insurance companies
  amounted to LE 12.65 billion on 30th June 2005,
  compared to LE 11.63 billion on 30th June 2004,
  up 8.8 per cent.
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• The insurance companies assets amounted to LE
  20.385 billion on the 30th of June 2005,
  compared to LE 18.614 billion on 30th June 2004,
  up 9.5 per cent.
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During the last 5 years
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• 3- Reforms and Strategies

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• Reforms and Strategies
• Our overall objective is to build an
  efficient, effective and stable insurance sector
  that supports both the needs of the economy and
  Egyptian consumers with world-class products and
  services, while meeting international
  commitments to more liberalization of the
  sector.  The following steps have been taken

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Restructuring and Privatization "Start up
Strategy"

• The government believes that public-private
  partnerships are becoming increasingly important.
  A project to restructure and privatize the four
  state-owned insurance companies has begun.  This
  project is designed in two stages the first to
  restructure and develop strategies the second to
  implement privatization strategies. 

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• Significant steps have been taken. A financial
  advisor has been appointed to assist the Ministry
  of Investment to restructure the four state-owned
  insurance companies. 
• The establishment of an independent real estate
  company is expected to acquire and manage the
  real estate portfolios of the four state-owned
  insurance companies.

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Regulatory Reform

• The Ministry of Investment, in coordination
  with EISA, introduced a comprehensive reform
  programme across many areas, including

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• Preparing draft laws to be presented to the
  parliament for approval including
• A new compulsory Motor Insurance Act.
• Amendment to the Insurance Law 10/1981 allowing
  corporations to act as insurance brokerages
  instead of limiting this activity to individuals
  as set in the current law. In addition to
  introduce new rules for the Policyholders'
  Protection Fund.

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• Reducing stamp duties on insurance policies and
  in collaboration with the Ministry of Finance.
• Ministerial Decree was issued to allow flexible
  investment policies to be adopted by Private
  Insurance Funds and also to organize the rules
  and procedures for group retirements.

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• Ministerial Decree amending to apply the
  principle of "Fit and Proper Person" and to allow
  companies to submit their insurance policies for
  specific lines of business such as Oil, Aviation
  and Engineering in English wording.
• EISA issued a set of rules for combating money
  laundering in the Egyptian insurance market, to
  ensure its proper monitoring and regulation.

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Corporate Governance

• As a part of the plan set by the government of
  Egypt and the Ministry of Investment to ensure
  proper management practices in the Egyptian
  market, Ministerial Decree was issued applying
  Corporate Governance Principles.
• An internal control committee was set up in the
  insurance and reinsurance companies adopting the
  principles of Corporate Governance to comply with
  international standards

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Market Liberalisation and Global Integration

• International insurers have accelerated their
  investments in Egypt since barriers to entry
  began to be eliminated when liberalization began
  in 1995.
• The insurance sector has been liberalized
  significantly since 1998 when the Law 10/1980 was
  amended to allow 100 per cent ownership by
  foreigners in local insurance companies, which
  has driven the enhancement of the schedule of
  commitments for the Egyptian insurance sector
  under GATS (1998).

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• As a result, several acquisitions took place in
  the Egyptian insurance market during the fiscal
  year 2004/05 for example ACE International
  Holding Company increased its shares from 51 to
  98.
• Additionally, foreign experts are allowed and
  encouraged to conduct business in Egypt freely as
  a means to attract foreign expertise. In addition
  to providing innovative insurance products,
  multinational companies transferred services and
  technologies such as risk management, actuarial
  and investment services, information technologies
  and also increased competition in the market.

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Human Resources Development and Public Awareness

• Recognizing the specialized nature of the
  insurance profession requiring specific
  quantitative skills, EISA and state-owned
  insurance companies have sent several staff
  members to the USA and UK to be certified as
  either life or non-life actuaries. 
• Additionally, the Egyptian Society of Actuaries
  and the state-owned insurance companies, in
  collaboration with EISA, announced that a trust
  fund will be established to build a strong
  actuarial profession to support market reform and
  growth.

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Perspective, Strategies and Objectives

• It is clear that enormous progress has been
  achieved, but there is still more to be
  accomplished to complete the development and
  reform programme.
• The Ministry of Investment and EISA believe that
  developing and implementing the insurance
  modernization programme will require a sustained
  efforts to make such following strategies and
  objectives become a reality

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• Enhancing the role of the Egyptian Insurance
  Federation to be more dynamic and effective to
  support and represent the industry through
  expanding its activities to include gathering
  data for long tail insurance classes.
• Comprehensive Review of Act No.10/1981 and its
  amendments to cope with the prospective needs of
  the market.
• Encouraging alliances between insurance and banks
  which it is believed will drive market growth in
  the near future.

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• Encouraging the establishment of Takaful
  Insurance Companies.
• Establishing training centers for developing and
  building insurance capacity.
• Establishing a Data Information Bank (DIB) to
  enact the principles of transparency in the
  market.

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Thank You