Interview: Hamed Mabrouk
How has the insurance sector been affected by recent reforms and policy changes?
HAMED MABROUK: Insurance is very interesting because we deal with practically every sector in the economy and companies of all sizes. Thus, we see which sectors are doing well and which companies are making investments, and we have an overall view of what is happening. When we look at the recent history of Egypt, we see that there have been many phases.
We had a phase when most of our economic partners came from the Soviet Bloc and then a phase when it was just the US. Now, however, we are seeing a good mix of investors coming into the country including French, Italian and German investment. The UK has also been making a huge effort since Brexit to revive old partnerships with Egypt. Our foreign trade policies have been very good lately, and the government has been handling the situation well. It is beneficial for the country to diversify our trade partners and improve our trade relations.
What factors have driven growth in the sector?
MABROUK: When we look at the current state of the insurance sector in Egypt, there are two main factors to keep in mind. The first factor is that from 2011 until the first half of 2014, with the insecurity that our country experienced, people were looking at insurance as the only solution to safeguard their assets at a time when the only security was in people’s fixed assets. That is the key to understanding why the insurance industry saw double-digit growth during that time period.
The second factor is that the insurance sector remains underdeveloped in Egypt. Accordingly, if we look at the current insurance penetration rate, we are double and even triple where we were in the past. However, if we look at contribution to GDP and compare it to countries like Lebanon or Morocco, they are at about three times where Egypt is in 2017. Current estimates of the US put its number at approximately 10 times where we are.
When we look at expenditure per capita, which is what shows the penetration of insurance among the population, we have risen from 0.1-0.2%, to approximately 0.6-0.7%. This is far behind a market like the US where everyone spends between 10% and 12% of their income on insurance. So, the insurance sector has already experienced significant growth and there is plenty of room for more.
What do you consider as the biggest challenges to operating in this market?
MABROUK: In Egypt we currently have only 10 obligatory insurances, whereas, if you take France for example, there are over 120. So, we are definitely behind in this regard, and there is substantial room to expand insurance education in particular. I also believe that the number of insurance companies has grown too much and that Egypt is oversaturated. We currently have between 36 and 40 companies in the insurance sector, while only a very low percentage of the population is insured.
Where do you see the potential for increased levels of insurance penetration?
MABROUK: The present level of small and medium-sized enterprises that are insured is too low. Additionally, for most of those the level of insurance is not very refined. When they get insurance, it is primarily just to tick a box for the banks. To give you an idea of the numbers, the insurance penetration level in the commercial sector is 80%, but the level in retail is under 20%. Then again, these numbers have helped the insurance industry grow faster than the economy. If one looks at the growth curve since 2012 and compares it to the country’s economic growth, you will find that premiums have grown three or four times faster than the broader economy.
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