The insurance industry was in the limelight last week as Egyptian and American officials participated in a two-day seminar discussing its current status and future challenges.
The conference sponsored by the Egyptian Insurance Supervisory Authority (EISA), the Egyptian Insurance Federation (EIF), and the US Department of Commerce. It also brought together private sector experts to review recent improvements in the insurance industry and to outline strategies for boosting its competitiveness as a vehicle for future growth. According to Youssef Boutros-Ghali, minister of economy and foreign trade, "the insurance sector has to move center stage in the Egyptian economy."
Ghali is quoted by Al Alam Al Youm as saying the industry can, for instance, "reduce the risk associated with investments and create a more secure environment for foreign and local entrepreneurs" by promoting long-term savings in the absence of any claims from insurance policy holders.
At the same time, however, "it is crucial for Egypt's economy that the insurance sector develop in an open environment and that insurance companies operate to the benefit of Egypt's consumers by disclosing the terms of the insurance contract and the technicalities of the claim process," Ghali added.
Since competition from foreign insurance companies in Egypt encourages greater transparency, there might soon be more pressure on domestic companies to divulge the details of their policies.
According to Daniel Kurtzer, the US ambassador to Egypt, the process, however, is symbiotic.
Hence, "the development of Egypt's insurance sector will also attract more foreign investments, provide capital for infrastructure projects and a safety net in areas such as health care, retirement savings and the risks facing consumers and businesses."
Participants, however, also noted that the lack of public awareness among individuals and companies about the importance of insurance impedes growth in this sector of the economy. "People need to understand that insurance is for their own benefit. They have to know that insurance is a way for them to feel secure about their future," stressed Steven Goldstein, the senior vice president of the Insurance Information Institute, a private US trade association.
According to Goldstein, the government can help the insurance industry market its services and make "citizens feel more secure about the companies they do business with, either by accrediting these insurers or by requiring them to maintain a certain level of financial strength in order for consumers to feel confident that their money is going to be there when they need it."
He also suggested the government make greater efforts to ascertain the compliance of insurance companies with existing regulations to convince the public that it stands behind the integrity of the insurance industry. The EISA, which was established to protect the rights of insurance policyholders and beneficiaries, at this point only monitors insurance conditions by calling on companies to submit an annual report on any changes in policy and tariffs.
EISA is also responsible for increasing awareness of insurance benefits among individuals and companies through public campaigns. According to EIF chairman Hassan Hafez, Egypt is seeking to advance its insurance market by introducing strong solvency rules and focusing on the market conduct of insurance companies.
Currently, the three state-owned insurers - Misr, Al-Sharq and National - dominate the insurance market with a combined market share of 80 percent. – (Albawaba-MEBG)
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