Strong growth projected for Egyptian insurance sector

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Insurance

A new report from Moody’s Investors Service predicts that the Egyptian Insurance market will experience strong premium and profit growth in the next 12 to 18 months.

The new report, titled Insurance - Egypt; Expected Gradual Economic Recovery Will Drive Premium and Profit Growth for Egyptian Insurers, suggests that insurance will grow with the aid of the country’s economic recovery. It estimates real gross domestic product growth of three per cent for the 2016 fiscal year, with an average growth of four to 4.5 per cent until 2019. In 2014, growth was at 2.2 per cent.

Mohammed Ali Londe, an assistant vice-president at Moody's Investors Service, said that the market in Egypt was one of the fastest growing in the world, and one with a lot a lot of potential. He added: "Absent any political or economic upheaval, we expect the market to expand in double-digit figures, helping to cement improving profitability post-revolution."

Moody’s report expects the start of large-scale infrastructure projects in the country will help to expand the need for insurance. Also newly proposed bills in the country could make health insurance compulsory for citizens.

The report points out that the insurance industry in Egypt still faces challenges, one of which is high sector concentration. Lorde explained: “The top six players in the Egyptian insurance market account for 69 per cent of total premiums written in financial year 2015. The rest of the market is fragmented, leading to unfavourable pricing practices and operating performance volatility, especially among the smaller players."