Egypt's insurance sector prepares for a new comprehensive law

The insurance sector’s ongoing reform process has strengthened the regulatory environment and fundamentals remain relatively solid. While some regulations have placed new demands on insurers, the fact remains that the country’s low level of insurance penetration translates to significant unexplored potential – and further regulatory reforms are expected to increase the number of compulsory products. Nevertheless, insurance providers will need to navigate economic uncertainty in order to take advantage of these favourable conditions.

After weathering the Covid-19 pandemic relatively well, Egypt’s insurance sector now faces other challenges. Inflation reached 12.1% in March 2022, and while the government has taken steps to mitigate the impact of rising prices on the most vulnerable households, many Egyptians have seen their disposable income decline, which will have a knock-on effect on the insurance industry. The devaluation of the Egyptian pound by 16% in the first quarter of 2022 has also caused the value of the country’s insurance market to decrease, extending a trend that began when the pound was devalued in November 2016.


Supported by a large population and an expanding economy, insurance premium has been expanding steadily in recent years. According to the latest Financial Regulatory Authority (FRA) statistical yearbook, total gross premium reached LE47.5bn ($3bn) in FY 2020/21, marking an increase of 18.5% over LE40.1bn ($2.5bn) in FY 2019/20. The country’s recent economic growth has driven sector development. “Egypt had a good increase in GDP during the pandemic, and this has helped to increase penetration,” Alaa El Zoheiry, chairman of the Insurance Federation of Egypt, told OBG. “If the economy is growing, it means people have jobs, and they are buying houses and using services that require insurance.”

While the pandemic resulted in a steep decline in claims in many countries due to strict lockdowns and suspensions in economic activity, claims saw a reasonable increase in Egypt given that restrictions were mild relative to other countries. Gross claims paid in FY 2020/21 stood at LE23.4bn ($1.5bn), up from LE18.9bn ($1.2bn) in 2019/20 and LE10.8bn ($682.2m) in 2015/16. Payouts have historically been split almost 50/50 between the life and non-life segments.

Market Structure

Egypt’s insurance sector is one of the oldest in the region and is considered to be highly competitive compared to the sector in other emerging markets. Al Ahlia, the first domestic firm, began operations in 1900. By the time the country declared itself a republic in 1953, there were 14 foreign and domestic insurance providers. The sector was largely state controlled in the two decades that followed, until a liberalisation process from 1975 onwards allowed the market to attract new providers and broaden the range of offerings.

As of April 2022 the insurance sector comprised some 40 companies. The main player, state-owned Misr Insurance Company, accounts for approximately 27% of direct premium in the life insurance segment and 40% of direct premium in the non-life segment, according to FRA data. The provider’s combined life and non-life operations recorded gross total premium of LE9.6bn ($610m) in 2021.

Albeit at a much smaller scale, the country’s other insurers have secured solid positions in both segments of the market. For life insurance, Allianz Life Assurance accounted for 22.8% of direct premium in FY 2019/20, followed by Met Life Egypt (20%), Axa Egypt Life (13.7%) and QNB Life Insurance (4%). Overall, the five largest insurers in the life segment accounted for more than 87% of direct premium.

Market weight is considerably more skewed in the non-life segment. Misr Insurance accounted for 40% of direct premium in FY 2019/20, while the second-largest provider, Axa Egypt, accounted for 7.7%. These players are followed by GIG Egypt Insurance (6.5%), Allianz Egypt (5.6%) and Bupa Egypt (5.4%). Combined, these top-five providers captured 65.2% of non-life direct premium in FY 2019/20.

Indeed, insurance provision is concentrated among seven or so key providers, with other firms accounting for negligible shares of the market. However, Misr Insurance’s competitors have been slowly chipping away at its leading position as the sector has developed. Between FY 2018/19 and 2019/20, for example, the state insurer’s share of the life segment decreased from 28.8% to 26.9%. The company’s position remained more stable in the non-life segment, though, at 40.7% and 40%, respectively.

Distribution Channels

Insurers leverage a large network of brokers and agents to sell their services. Brokers can claim commissions ranging from 30% to 60%, and get paid full commissions once insurance coverage is activated. This protects brokers and distributors from the risk of non-payment by customers. By FY 2018/19 brokers and agents were responsible for 70% of all gross written premium. As of June 2020 there were 81 insurance brokers and an additional nine reinsurance brokers operating in the country. However, that month the FRA suspended the allocation of new brokerage licences, basing its decision on the large number of brokers already in the market.

Digital distribution avenues have also emerged. Fawry, one of the country’s fastest-growing e-payment and financial services platforms, was awarded an insurance brokerage licence at the end of 2018. The company offered five insurance and micro-insurance products as of the first quarter of 2022, including coverage for travel, vehicles and health.

The move to provide insurance through online channels was accelerated by the pandemic, which prompted the sector to invest more in digitalisation. “The insurance regulator has done a great job in terms of approving the selling and issuing of policies online. While very difficult in the past, it was agreed to quickly due to the pandemic,” El Zoheiry told OBG.

Insurance Lines

The weights of the life and nonlife segments have stayed in fairly narrow ranges in recent years. The life insurance segment accounted for 46.2% of total gross premium in FY 2019/20, or LE18.5bn ($1.2bn), up from 43.8% the previous fiscal year. Growth prospects remain strong for the segment, as new entrants joining the market seek to capitalise on its significant potential due to the low penetration rate. Indeed, the low level of insurance coverage – coupled with upcoming regulatory overhaul – is likely to keep Egypt in the minds of international insurers as a potential destination for expansion. “Firms know that it is easy to transfer profits from Egypt, so it is a very attractive market with considerable growth prospects,” El Zoheiry said.

Fresh investment in the sector underlines this trend. In August 2020 EFG Hermes and GB Auto concluded their acquisition of a combined 75% share of Islamic life insurance provider Tokio Marine Egypt Family Takaful (TMFT) for LE84.7m ($5.4m). The deal allowed the companies to each control 37.5% of the insurer, while Tokio Marine Group remains in control of the remaining 25% of the business. TMFT recorded LE42m ($2.7m) in direct premium in FY 2019/20. Wafa Assurance, part of Morocco’s Attijariwafa Bank Group, was granted its insurance licence that same month. The Egyptian subsidiary began offering life insurance products with capital of LE150m ($9.5m).

In June 2021 Kuwait Insurance announced plans to establish a branch in Egypt, which would focus on the life insurance segment. The insurer is expected to set up operations with capital of LE100m ($6.4m), but was still awaiting regulatory approval from the Egyptian authorities as of April 2022.

However, it is the non-life segment that continues to account for the majority of the market’s gross premium. In FY 2019/20 non-life insurance products attracted LE21.6bn ($1.4bn) in gross premium, or 53.8% of the total. Local sector regulation mandates four insurance products: motor third party liability; civil liability for construction works; accident insurance for rail and the metro; and coverage for elevator issues. The number of mandatory insurance lines is set to increase with the expected approval of new regulations in the second half of 2022.

As in many other countries, motor coverage is a reliable and significant source of income for insurers. The motor mandatory and motor comprehensive lines accounted for a combined 26% of all direct non-life premium in FY 2019/20. Still, other non-life segments have become prominent. Health insurance grew by 18% to account for 21% of direct premium in 2019/20, while the third-largest non-life line, fire insurance, also grew by 18% to account for 16% of premium. Direct premium for aviation insurance rose by 18% as well, accounting for 3% of all non-life premium – tied with marine cargo insurance. Broadly speaking, total direct non-life insurance premium increased by 12% in 2019/20. At the same time, direct claims paid in the segment fell by 4% to LE8.2bn ($521m), with health the largest category, at one-third of the total.

Health Coverage

A series of changes will be implemented for medical insurance in the coming years as the state-mandated health insurance scheme is gradually rolled out. The Universal Health Insurance Law of 2018 set in motion plans to create a system for compulsory medical coverage. The undertaking, which is partially funded by a $400m support package from the World Bank, was launched with a successful pilot project in Port Said in July 2019. In April 2022 the Ministry of Health and Population announced that 69% of Egypt’s 103m-strong population was covered by the scheme. Full rollout is expected to be completed by 2027. The full scheme is forecast to cost an estimated LE210bn ($13.3bn) per year.

Under the new framework, employed persons are required to pay a premium equal to 1% of their monthly salary into the scheme, with an extra payment of 3% for an unemployed spouse and 1% for each child. Employers, meanwhile, will be required to pay an amount equal to 3% of each employee’s monthly salary. Low-income families that are eligible for social welfare programmes are exempt from paying the health coverage premium. Households in which the breadwinner is unemployed or disabled are also exempt from contributing.

As of May 2022 it remained unclear what role private insurers will play in the government scheme, although officials have stated that private players would provide coverage by sharing costs with the government under the auspices of the new system. Premium rates had not been established by that date.


The legal framework has evolved accordingly. The insurance industry’s main regulation, the Insurance Supervision and Control Law No. 10, has undergone several changes since it first came into force in 1981. The FRA has implemented several decrees since it was established in 2009, which have gradually changed the market’s operating rules. However, in 2018 the government announced that it would move to modernise the sector through the implementation of a comprehensive Insurance Act.

Details regarding the law were published in 2019, which illustrated government plans to increase minimum capital requirements from LE60m ($3.8m) to LE150m ($9.5m) for insurance companies that administer life or property insurance. However, operators aiming to secure fuel-hedging contracts or insure the aviation sector will need to provide an additional LE300m ($19.1m) in capital. The planned bill also includes a doubling of the maximum amount insurers can pay out for life insurance claims, from LE40,000 ($2540) to LE80,000 ($5080).

Key Changes

The Insurance Act is expected to have major implications for the way the sector is managed, particularly by further aligning activity with international best practices on issues such as solvency requirements, corporate governance, dispute resolution and recapitalisation. Because it will introduce new compulsory coverage – primarily in the area of professional indemnity and liability – the act is anticipated to increase awareness of the need for insurance in the Egyptian market and drive penetration among businesses and individuals upwards.

Although a date for parliamentary approval had not been set by the end of the first quarter of 2022, several analysts expect the law to be approved by the end of the year. However, the economic and governance challenges brought about by Russia’s invasion of Ukraine and its impact on global commodity prices may slow process. Nevertheless, sector stakeholders are cautiously optimistic regarding the new insurance law, although several implementation details are yet to be ironed out. “The law should have a very positive impact on penetration, but we still need to see the specifics. The decrees can either make it easier or more difficult for market players,” Hisham Ali, investment director at Allianz Egypt, told OBG.

Insurers’ ability to adapt to new minimum capital rules and governance requirements will vary across the market. To mitigate difficulties that arise for companies in a weaker position, the financial authorities have suggested that support mechanisms, such as tax exemptions, could be used.

Managing risk and adapting to new reporting rules under International Financial Reporting Standard 17 will require added work by insurers. “Some companies do not have a risk management department and this is a problem. At the moment, a risk committee at the board level is not obligatory; it is only mandatory to have an audit and compliance department,” El Zoheiry told OBG. “Some 15-20% of insurers currently have a risk committee,” he added.

With several insurers holding very low market share and rising minimum capital requirements ahead, the sector is ripe for some degree of concentration. Many insurers may move to increase their market share and establish a stronger presence in the post-pandemic insurance business via a merger or acquisition.


Despite some near-term headwinds for the broader economy, the Egyptian insurance sector is poised to continue expanding in the coming years as it navigates the ongoing regulatory transition. Although initially driven by the logistics disturbances caused by the pandemic, inflation is now increasingly being fuelled by the war in Ukraine, which quickly pushed energy and food prices upwards in the first half of 2022. If high levels of inflation are sustained for the remainder of the year and into 2023, insurance premium may be impacted as customers try to reduce their premium cost burden or cancel policies altogether. However, given the size of the Egyptian market and the level of unserved needs, insurance providers may be able to compensate for the losses of certain customers with the acquisition of new ones.

Over the medium term, the traditional face-toface model of selling insurance will likely become less popular as digital avenues expand, especially on the retail side as younger Egyptians are targeted.

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Cover of The Report: Egypt 2022

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