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How many insurance companies are there in Egypt?

How many insurance companies are there in Egypt?

The Egyptian insurance industry, one of the oldest in the region, has shown a welcome degree of resilience in recent years. Despite its long history, however, the market remains at a relatively nascent stage of growth compared to those in advanced economies, characterized by a low penetration rate and modest insurance density. While this means that growth opportunities abound, questions remain as to how this will be achieved. Much hinges on the anticipated promulgation of new insurance legislation, which promises to open up new business and distribution channels. For this reason the issue of regulation has acquired new prominence in industry debates, second only to the overall economy.

Long Lineage

The sector’s history in Egypt has deep roots, extending as far back as the 19th century, when French and British firms provided cover for commercial interests during the nation’s time as a British protectorate. By the mid-1990s, the sector was made up of 12 insurers in all, with four state companies competing with six private players and two free-zone firms.

By this stage, the increasingly vibrant market was already operating under the legal framework that underpins the sector today: the Insurance Law of 1981. This important piece of legislation placed Egypt at the forefront of the regional industry, and since that time it has been amended as needed to accommodate the development of the domestic sector.

One of the more significant amendments came in 1998, when the maximum permissible foreign participation level in domestic insurance companies was raised from 49% to 100%, a change that helped to boost the number of market participants to 17. Since then, the most important alteration to the insurance landscape was the 2008 amendment, by which insurers offering both life and property cover were instructed to separate these lines of business.


Today’s Market

There are currently 32 insurance companies in Egypt, comprising 18 non-life insurers, 13 life insurers and one export credit insurer. Despite the large number of institutions competing for business in the Egyptian market, however, the premiums written by the top six companies account for nearly 80% and 90% of life and non-life business, respectively. On the non-life side, Misr Insurance Company accounts for around 55% of total sector premiums, followed by the private players Suez Canal Insurance Company (5.2%), Arab Misr Insurance Group (5.0%), Bupa Egypt (4.2%), Allianz Insurance (3.6%) and AIG Egypt Insurance (3.5%). The sector also has a significant level of foreign ownership. Recent arrivals include Tokio Marine, which entered the market in 2008 through joint ventures with two takaful players: Arab Misr Insurance, which is part of Gulf Insurance Group and has been active in Egypt since 1994, and AXA, which in June 2015 purchased Commercial International Life Insurance Company. More recently, 2015 saw the arrival of Dubai-based Islamic Arab Insurance Company (Salama), the world’s largest takaful and retakaful company, which established a local subsidiary.



Despite the economic turbulence of the past five years, the insurance industry has shown strong growth. Confidence in the industry has been greatly strengthened by the fact that insurers were quick to pay out on claims arising from the political turmoil which resulted from the revolution, despite being faced with losses estimated at over LE1bn (equivalent to $53m as of December 2016) for strike, riot and civil commotion damage that year. Total premiums have expanded consistently since the 2010/11 financial year, posting the highest growth in 2012/13, when the industry’s aggregate premium grew by 14.2%.

The smallest rise in premiums for the period came in 2014/15, when total premiums grew by 7.6%. Of the major business lines, health insurance has shown the most consistent expansion, with health premiums rising by double digits each year and reaching a growth rate of 26.5% in 2014/15. Fire and accident cover have also been strong performers during this period, with their growth aided by a greater awareness of the utility of insurance in a more turbulent era. The latest figures indicate that the growth of the past half-decade continued for most business lines in 2016. Total insurance premiums in the Egyptian market, both new and existing, amounted to LE13.4bn ($710.2m) as of the end of October 2016, a 39% increase on the LE9.6bn ($508.8m) total for the same period a year earlier.



While the continued growth of the wider economy is central to the sector’s performance, the industry’s regulatory framework also has a significant bearing on insurers’ financial statements. The legal framework underpinning the Egyptian insurance sector is one of the oldest in the region.

Although Law No. 10 of 1981 for Insurance Supervision and Control in Egypt, as it is officially known, remains the principal legislation for the sector, it has been augmented by a number of important amendments. The most significant of these are Law No. 156 of 1998 and Law No. 91 of 1995, but more recent legislation also bears upon the sector – such as Law No.72 of 2007, which made compulsory the purchase of motor vehicle insurance. Besides the 1981 law and its subsequent amendments, insurance companies, like other financial institutions, must abide by the Company Law No. 159 of 1981, as well as the more recent anti-money-laundering law and state laws regarding taxation.


Market Reform

The legal framework of the Egyptian insurance sector may soon undergo an alteration that promises to be the most significant in decades. The need to consult a wide range of stakeholders and a high degree of parliamentary scrutiny makes the promulgation of new financial laws in Egypt a long and sometimes fractious process. However, the new legislation is at an advanced stage: having spent 2015 reviewing its draft law, in 2016 EFSA submitted it to the Administrative Courts, where it began its process through government. While minor tweaks are likely, the majority of changes are likely to remain.

Among the most visible of these is a new minimum capital requirement of between LE120m ($6.4m) and LE150m ($8m), which is a significant hike from the current LE60m ($3.2m). This measure directly addresses questions surrounding industry sustainability. The regulator has also included a takaful component in the proposal, the first time that articles governing sharia-compliant coverage have been included in primary insurance legislation (see analysis). A separate category of standalone health insurers, which would be required to have minimum capital of between LE10m ($530,000).



Another provision paves the way for the creation of microfinance institutions. The introduction of microfinance products to the Egyptian market has been a central component of EFSA’s strategy since it created a specialized unit to develop the segment in 2009. According to the state-run statistics body, the Central Agency for Public Mobilization and Statistics, around 40% of the population lives below the poverty line, a factor that greatly limits the reach of standard insurance premiums.

Moreover, an estimated 97% of Egypt’s businesses employ less than 10 workers, and many of these small operations struggle to obtain suitable insurance cover at an affordable rate. While these factors indicate excellent potential for micro-insurance, the segment is not without challenges of its own. Among these are the need for specialized technical expertise, a lack of standard product models, the difficulty of balancing consumer protection with the flexibility that pioneers of microfinance require, and the unsuitability of conventional distribution channels such as brokers and agents.



Retention rates in Egypt are high by regional standards, with only 6.6% of life insurance and 49.4% of non-life cover ceded in FY 2013/14, according to EFSA. Historically, Egyptian insurers were compelled to cede up to 30% of their premiums to the state-owned Egypt Re, but this mandatory cession ended when Egypt Re was merged with Misr Insurance in 2007. The only remaining compulsory cession is a 5% cession requirement to African Re, a regional multilateral insurance company with a local presence.

Egypt’s insurers have recourse to a large number of international insurance companies when it comes to passing on risk, provided they meet the criteria established by EFSA. According to the current framework, among other requirements, international reinsurers should have a rating from one of the four major international rating agencies – AM Best, Standard & Poor’s, Fitch or Moody’s – or capital of more than $60m.



Egyptian Takaful Life Insurance, a subsidiary of Salama, arrived in 2015, joining eight other takaful operators in Egypt. Takaful life insurance premiums, including new and existing issuances, for the first four months of 2016 amounted to LE437m ($23.1m), which equated to around 12% of total issuances of life insurance in Egypt. Takaful property insurance, meanwhile, amounted to LE389m ($20.6m), or 17% of the total issuances of property insurance in the market. In July 2016, EFSA chairman Sherif Sami announced that takaful companies operating in Egypt have now claimed a market share of 11.5%.



Egyptian insurers face a number of challenges as they set about growing their balance books. Chief among these are the long-term concerns of low income, unemployment and an outdated legislative framework. While EFSA’s draft law and its provisions for micro-insurance address these issues to a large extent, these and other challenges are likely to persist through the short and medium term. The insurance sector, for example, is not immune to the currency crisis which has negatively affected economic growth over the past year. The motor segment is particularly exposed to this issue, as a weakening Egyptian pound has resulted in higher prices for imported auto parts, the cost of which has largely been borne by insurers who have not raised premiums significantly.

Some relief may be granted to insurers operating in the motor arena, however, through the signing of a new collaboration protocol between the Ministry of the Interior and the Insurance Federation of Egypt, which will allow insurance companies to access data on traffic violations by their customers, and then use this data to price policies more efficiently.


Despite these obstacles, there is significant potential for growth in Egypt’s insurance industry. Oil importing economies in the MENA region, such as Egypt, are likely to see premiums grow in excess of GDP growth where governments are able to maintain their ambitious development plans. In this context, the confirmation in January 2017 that Egypt would receive a $12bn funding package from the IMF is good news for domestic insurers. Commercial lines such as construction are likely to show particularly strong growth, as investor sentiment picks up and the government’s attempts to improve the business climate begin to bear fruit. Another inherent market strength is Egypt’s moderate exposure to natural catastrophes, which allows companies to obtain technical profits despite very low insurance rates. This market characteristic serves the industry well in terms of client acquisition – even in an era of suppressed corporate profits.

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