Egyptian insurance market has “untapped potential”- Moody’s
Egyptian insurance market has “untapped potential,” ratings agency says: Egypt’s insurance market is loaded with “untapped potential,” Moody’s said this week as its PR blitz on Egypt continued. The credit rating agency predicted that the good times will continue to roll for the industry, forecasting revenues to “grow strongly and profitably” over the short to medium terms. This is thanks to the improving economic situation, government plans to enforce mandatory health insurance for all Egyptians, and proposed capital regulations contained in the Insurance Act.
Moody’s thinks the Insurance Act is a good thing. The insurance companies don’t. Moody’s says that the industry will benefit from the improved credit profile that will come with the legislation’s proposal to increase capital requirements. In its current form the legislation would raise the minimum capital requirements for insurance companies by 150% to EGP 150mn, and a huge 733% (EGP 500 mn) for reinsurance companies. This will “support absorption of both underwriting and investment risk, and lead to market consolidation,” they say. Egyptian insurers meanwhile have taken a slightly different view, with the Insurance Federation of Egypt complaining to the Financial Regulatory Authority about the large increases.
The key to all of this is for the industry to try to grow the pie, as Misr Insurance Holding Company boss Basel El Hini told us in the Enterprise 2019 CEO Poll — new entrants are piling into the market and fighting over market share rather than trying to grow the size of the market to everyone’s benefit, he suggested. One of the top obstacles isn’t regulation, but a lack of consumer knowledge about insurance and a fairly deeply rooted social suspicion of the insurance as a class of products.