The current status of insurance sector in Egypt • Market structure • Life insurance • Non-life insurance • Reinsurance • Investments • Regulation and supervision of insurance
Market structure • The Egyptian Insurance Market composes of :- • The Supreme Council of Insurance • The Egyptian Insurance Supervisory Authority (EISA) • 17 direct insurance companies, 6 of which are composite, 6 are non-life, 3 are transacting life insurance, one is transacting credit insurance for exports and one cooperative society • Another 2 new life insurance companies have just licensed • A specialized reinsurance company • 614 Private Insurance Funds • The Government Insurance Fund for fidelity guarantee • Insurance Federation of Egypt • Insurance Pools • Cargo supervision & surveying office of Egypt
The Supreme Council of Insurance FORMATION Formed under the chairmanship of the Minister of Planning and the membership of : - The chairman of EISA and his deputy - The Chairmen of the insurance and reinsurance companies - A representative of the insurance funds. - Two insurance Professors from the Egyptian Universities. - A Chancellor from the Council of State - A representative from the Public Sector Information Center. Ministry of Planning Ministry of Finance the trade unions organization of the insurance sector each of the auxiliary organs
ROLE The Supreme Council of Insurance has the competence to decide the general objectives of the insurance activity and to approve the policies needed for the achievement of these objectives.
The Egyptian Insurance Supervisory Authority (EISA) EISA has the competence to supervise and control the insurance activity in Egypt whether at the establishment, during transaction or at the termination of the business. The Authority in particular aims at the implementation of the following objectives :- 1- to protect the rights of insurance policyholders, the beneficiaries and third parties. 2 - to secure the achievement of the economic and social objectives of insurance activity and preserving the national savings.
3 - to secure the soundness of the financial positions of the Insurance market units, coordinating among them and preventing any conflict between them. 4 - to participate in developing insurance awareness in the country 5 - to strengthen the ties of co-operation and integration with the other control and supervisory authorities at the Arab, African, and world level. 6 - to promote the insurance professions and to contribute effectively to the availability of the expertise.
Market Structure Table 02/03 Figures (in L.E. Million) The premium income for Egypt Re is not added to the total premium income The foreign participation of the paid up capital represents 12.3%
Life Insurance Business (in L.E. 000)
Legislation • The main insurance legislation regulating the insurance market are • Act No. 10 of 1981 for the supervision and control of insurance in Egypt and its amendments by the Act No. 91 of 1995 and Act No. 156 of 1998 • Act No. 54 of 1975 for the Private Insurance Funds and its regulations • Act No. 652 of 1955 for Motor Liability Insurance
Status as regards liberalization and privatization Act No. 156/1998 allows private sector entry into the capital of the state-owned insurance and reinsurance companies The Act also removed all restrictions on majority foreign ownership of insurance companies It also allows non-Egyptians to manage insurance companies based in Egypt It is worth to mention here that 8 companies are managed by foreign managing directors
Status as regards Financial Sector Assessment Program Detailed Assessment Report on Observance of the Insurance Core Principles and Transparency of Insurance Regulation was prepared by a lead insurance specialist from Financial Sector Department of the World Bank. The assessment was based on a review of the legal framework, and focused mainly on the supervisory work of the Egyptian Insurance Supervisory Authority. As a result, and according to EISA’s adopted plan of enhancing the supervision standard in an open market and increased competition, the following new regulatory decrees have been issued : -
The Ministerial decree No.157 for 1999 for the issuance of the Accounting Measures for Insurance and Reinsurance companies . • The Ministerial decree No. 157 for 2003 amending the executive regulation by adding an article for setting up an internal control committee and applying the principles of corporate governance . • According to article (7) of law No.80 of 2002 for combating money laundering , the rules and measures as well as the executive procedures for insurance and reinsurance companies have been issued .
EGYPT SCHEDULE OF SPECIFIC COMMITMENTS Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons • Insurance Services, the main criteria which the economic needs test apply are as follows: • Surplus demand to traditional classes of insurance gives new companies an opportunity of working without harmful competition to the market or financial positions of existing companies and consequently policyholders • Exhausting of 50% of the capacity of the existing companies, which is calculated on the basis of solvency margin, and there is a surplus demand in excess of the capacity which enables a new company to achieve its purposes. • Setting up of a new company leads to an increase of total retention in the market; taking into account the technical considerations. • The new companies shall introduce new insurance covers.
The Effects of Liberalization • The Foreign owned shares in 2002/2003 was 12.3% of the insurance market capitals and 54.6% of the private sector capitals • Their share of the life insurance premium was 23% of the whole market and 73.1% of private sector • Their share of the non-life insurance premium was 10.8% of the whole market and 42% of private sector • There are 8 foreign managing directors leading 8 insurance companies • There are another 8 foreign chairmen and deputy chairmen • Two foreign actuaries and 2 loss adjusters obtained licenses and registered in EISA’s register