Egypt’s insurance sector faces a challenging period in FY 2020/21. An ongoing process of reform promises to strengthen the legislative and regulatory platform that underpins the industry, but is likely to result in short-term difficulties for some sections of the market. The effects of the Covid-19 pandemic, meanwhile, have disrupted business and undermined growth prospects around the globe. Nevertheless, the domestic industry has weathered economic storms in the past and its fundamentals leave it well positioned for expansion when circumstances allow.

Vibrant Market

The local insurance sector is one of the oldest in the region. The first domestic insurer, Al Ahlia Insurance, entered the market in 1900, which at that time was dominated by foreign firms. By the time Egypt gained independence in 1953, it was served by 14 local and foreign companies. For more than two decades the industry was in the hands of the state, but the liberalisation of the insurance market in 1975 by President Anwar Sadat ushered in a new era of growth.

In 2020 the market is populated by 36 insurance and reinsurance companies, according to the Financial Regulatory Authority (FRA) – the body that oversees the sector. Since 2008 the nation’s insurance regulations have divided the sector into two main business lines. Currently, just over one-third of Egypt’s insurers are classified as life insurers, while nearly two-thirds are licensed as property insurers. The largest player is state-owned Misr Insurance, which dominates both the general insurance market and, through Misr Life, the life insurance segment. The combined assets of the Misr Insurance Holding Company – LE6.5bn ($400.6m) at the close of FY 2018/19 on June 30, 2019 – make it the largest non-banking financial institution in Egypt. The life and property divisions of the company accounted for around 55% of the industry’s total assets in 2018/19. Other significant players, in order of market share, include Suez Canal Insurance, Mohandes Insurance, Delta Insurance, AIG, Arab Misr Insurance Group, Metlife, AXA Life Insurance Egypt and Egyptian Export Credit Insurance Company.

Many of the more recent market entrants are takaful (Islamic insurance) operators. Such insurers include Egyptian Takaful, Egyptian Saudi House, Wethaq, Orient Takaful, Tokio Marine General Takaful and Misr Takaful Insurance. In recent years most takaful operators have grown more rapidly than their conventional peers, but to date the industry lacks the comprehensive sharia-compliant regulations that many believe are necessary for the segment’s sustained expansion. This regulatory gap is expected to be filled following the implementation of the new Insurance Act, the final draft of which was awaiting approval as of May 2020. In the meantime, new regulations introduced in 2019 have more clearly established the path by which takaful providers can convert to conventional insurance companies. The rules stipulate that companies wishing to make the switch must provide the regulator with details on how outstanding takaful policies will be cleared. Another regulatory change in 2019 allowed conventional insurers to own stakes in takaful providers.

A number of funds and organisations also play a role in the sector. Five government insurance funds provide pooled coverage for school students, postal services and accidents involving public transport, among other things. The Egyptian Cooperative Insurance Association insures against hazards in the land, river maritime and air transport segments, while around 320 private insurers offer coverage for people and needs as diverse as officers of the armed forces, cotton exports, steel, telecommunication employees, doctors, airport workers, hotels, banks and chambers of commerce.


Egypt’s insurance industry has shown strong growth over the past decade: according to the FRA, in the 10 years between FY 2008/09 and FY 2018/19 life and property net premium expanded by 236.6% and 347.8%, respectively. This growth trend continued into 2019, with FRA data showing that the aggregate premium of the domestic insurance sector amounted to LE25.7bn ($1.6bn) in the first nine months of the year, a 24.3% increase over the same period the previous year. Life premium showed particularly strong growth, increasing by 28.9% to reach LE13.7bn ($844.3m). Premium in the property and liability lines, meanwhile, increased by 19.3% to LE12bn ($739.6m) in the first three quarters of 2019.

Egypt’s takaful players have continued to outperform conventional insurers. According to the FRA, contributions collected by these operators rose 141% year-on-year in the first half of 2019, from LE1.9bn ($117.1m) to LE4.6bn ($283.5m). Sharia-compliant insurance accounted for just under 17% of the sector’s total premium in the first half 2019, compared to about 10% in the same period of 2018. With GDP at market prices approximately LE5.26trn ($324.2bn) in FY 2018/19, premium as a percentage of GDP is roughly 0.5%.


Retention rates in Egypt are relatively high by regional standards, with the non-life segment showing an aggregate retention rate of 55-60%, according to the Insurance Federation of Egypt (IFE). Egyptian insurers are required to cede 5% of their premium to African Re, a regional multilateral reinsurance company with a local presence. Reinsurance activity in Egypt is governed by a reinsurers register of nearly 300 companies that must meet a number of criteria, including a minimum capital requirement and a rating from one of the four major international rating agencies. The most common reinsurance practice is the establishment of straightforward treaty arrangements with reinsurers in Europe and the US.

Egypt currently lacks a dedicated reinsurance institution of its own, and therefore local reinsurance activity is confined to a small number of companies taking on risk from their fellow insurers. The government has been studying the possibility of establishing a national reinsurer since 2013, but the challenge of raising the estimated $50m to $200m that would be required for the venture remains an obstacle.


According to the FRA, Egypt’s life segment accounted for 45.6% of total premium in FY 2018/19. The segment is viewed as a promising one, and is attracting new market entrants: in December 2019 EFG Hermes and GB Auto revealed that they had used their non-banking financial arms to acquire a 75% stake in life insurance player Tokio Marine Egypt Family Takaful. Under the LE84.6m ($5.2m) deal, the two companies will combine forces to add new life and health insurance products to Tokio Marine’s offerings.

The bulk of the domestic sector’s premium, however, is derived from non-life products, which accounted for 54.4% of the total during FY 2018/19. There are currently just four compulsory lines: motor third party; civil liability for accidents involving elevators; civil liability insurance for construction work; and accident insurance for rail and the metro. Of these, the mandatory motor third-party liability (TPL) for bodily injury is the most important and has helped establish motor protection as the largest source of premium for Egypt’s insurers. Other significant business lines in the non-life category include fire insurance, health coverage, general accident and the protection of oil projects.

The creation of more compulsory lines promises to broaden the premium base of the sector over the medium term. In October 2019 the House of Representatives’ Housing Committee approved amendments to the Unified Building Code that would require buildings over five storeys or valued at over LE3m ($185,000) to obtain cover against construction-related damage. The draft Insurance Act, meanwhile, includes 21 classes of business that require mandatory coverage. One of the most controversial of them is divorce cover, which some observers have claimed will raise the cost of marriage.


The gradual introduction of a national health insurance framework may also provide new opportunities for Egypt’s insurers. After a successful pilot project in Port Said, which started in July 2019, the new universal health insurance scheme has been introduced in Ismalia, Luxor and South Sinai. Under the framework, employees are required to pay premium equivalent to 1% of their salary, increasing to 3% to cover an unemployed spouse and a further 1% for each child. Employers are expected to pay the equivalent of 3% of an employee’s monthly salary into the system. Citizens who are eligible to receive aid from the Karama and Takaful social welfare programmes will be exempt from paying premium, as will families whose breadwinner is disabled, unemployed or has no other sources of income. The national health insurance scheme, which is to be introduced in six stages and fully implemented by 2032, is expected to cost in the region of LE210bn ($12.9bn) per year and cover some 100m people, according to Mohamed Maait, the minister of finance.

The precise role of Egypt’s health insurers within this public system remains unclear. However, in April 2018 the government revealed that private sector insurers would be able to provide coverage through the new system, sharing costs with the government at rates established by the Social Healthcare Insurance Authority. The mechanism used to produce these rates is a matter of significant interest within the industry.


The insurance market continues to rely heavily on a network of agents and brokers in order to distribute its products and services. Together, they account for around 70% of the industry’s gross written premium. Brokers’ commissions range from 30% to 60% and, unlike some markets in the region, brokers receive their full commission upon activation of the insurance contract. As a result, they are not exposed to the risk of late or non-payment of premium by customers.

One of Egypt’s biggest e-payment networks has also entered the brokerage arena. Fawry, which offers financial services to consumers in over 90,000 locations nationwide, received a brokerage licence from the FRA in January 2019 and has subsequently revealed that it plans to enter the micro-insurance brokerage market before the end of 2020, partnering with a number of micro-insurers. Fawry’s market entrance aligns with the broader growth of electronic channels. Online sales have been permitted in the areas of compulsory motor TPL, travel and term life insurance since 2015, and insurers have invested heavily in IT platforms to serve these segments. Bancassurance, for its part, remains a relatively minor distribution channel in Egypt. Insurers are permitted to form tie-ups with up to four banks, but a prohibition on banks receiving commissions and bank staff selling personal insurance cover means the channel is largely limited to insurance sold on the back of loans, particularly motor insurance tied to vehicle sales.


Since its establishment in 2009 the FRA has used a series of amendments to gradually reform the sector’s principal legislation, the Insurance Supervision and Control Law No. 10 of 1981. In 2018 the authorities announced a more radical overhaul of the regulatory infrastructure in the form a proposed insurance act. The last round of consultations with insurance companies and other stakeholders was completed in the second quarter of 2019, and the Ministry of Justice spent the latter part of the year finalising the draft to take into account the changes that were proposed by the various groups involved.

Details of the draft that emerged in 2019 suggested the legislation will raise the minimum capital requirement for life and property insurance companies by 150% to LE150m ($9.2m), while doubling the ceiling for life insurance payouts to LE80,000 ($4930). Property insurers covering aviation assets or fuel hedging services would be required to hold an additional LE300m ($18.5m) in capital. Reinsurance companies, meanwhile, would see their minimum capital requirement raised from LE60m ($3.7m) to LE500m ($30.8m), a 733% increase. More significantly for the long term, the new act is expected to move the industry towards a risk-based capital adequacy system, as well as incorporate international best practices in key areas such as corporate governance, recapitalisation, solvency requirements, dispute resolution and digitalisation.

The changes in capital requirements are expected to pose a challenge to some insurance providers. The Ministry of Finance has, however, suggested that the effect might be mitigated by introducing tax exemptions for insurance companies. The new act is also likely to grant the FRA more power to govern the sector, focusing on areas such as licensing, business formation and board composition, as well as establish the FRA as the primary regulatory body for the health insurance industry.

Growth Hurdles

The depreciation of the Egyptian pound following its flotation in 2016 significantly reduced the value of the nation’s insurance market in dollar terms. While there has been a welcome return to the stability of the exchange rate, the impact of the depreciation on household income continues to undermine demand for non-compulsory lines.

The outlook for continued growth in 2020 and 2021 has been further complicated by the global Covid-19 pandemic. In addition to general restrictions on civic life – including curfews, bans on travel and the suspension of in-person lessons at schools and universities – the central bank, ministries and various regulatory bodies introduced measures to protect the employees and customers of a number of industries. In March 2020 the FRA introduced shorter working hours for insurance company employees, limiting them to between 9.00am and 2.00pm. Insurance offices, meanwhile, were instructed to limit their operating hours from 9.30am to 1.30pm. The effects of these and other measures will become apparent over the course of the year. The principal area of concern for Egypt’s insurers, however, is the ability of customers to meet premium payments.

Near-Term Challenges

Mitigating the effects of the Covid-19 pandemic is likely to monopolise the attention of insurers and the regulator over the short term, while more disruption may be felt across the sector as a result of the ongoing process of regulatory and legislative change. For example, the profitability of takaful providers may be negatively affected in 2020 by the implementation of the FRA’s new agency fees for the segment in February of that year. The recently introduced regulations stipulate a 25% contribution fee for life insurance companies that use the agency system and a 30% fee for property insurance companies.

At the same time, a system of universal health coverage is set to radically transform the private health insurance industry in the coming years. The clarification of the role to be played by private sector insurance providers remains a pressing issue for the industry. The imminent passage of the new Insurance Act and its introduction of new capital requirements may also prove a catalyst for change in terms of market structure. Smaller insurers that face difficulties in raising their capital base may prove attractive targets for the larger institutions seeking to broaden their client bases. Additionally, market participants are likely to be challenged by the introduction of a risk-based capital adequacy system and the increased complexity associated with it. Here, however, they have support from the IFE, one of the more active industry bodies in the region. The IFE launched its risk management department in early 2020, the purpose of which is to support the nation’s insurance companies as they face ever more complex technical, economic and social challenges – and in so doing help them to secure high credit ratings from international ratings agencies.


Despite numerous challenges facing the industry, the fundamentals of the sector support a positive outlook for long-term expansion. The IFE estimates that there is an insurance protection gap of approximately $2.8bn in the Egyptian market. The organisation proposes reducing this figure by promoting coverage in three areas, namely agricultural insurance, micro-insurance and government asset insurance. Fitch Ratings anticipates an average per annum expansion for the life and non-life segments of 5.5% and 9.9%, respectively, through to 2024. With premium as a percentage of GDP below 1% and a regulatory shift towards greater insurance penetration and wider financial inclusion, Egypt’s insurance industry is well positioned to take advantage of growth opportunities as they arise.