Mubasher: The Egyptian insurance market is likely to witness strong premium and profit growth in the coming 12-18 months, backed by the country's ongoing economic recovery, according to a report issued by Moody's Investors Service on Tuesday.
"The Egyptian insurance market may be small but is one of the fastest growing in the world with plenty of untapped potential," says Mohammed Ali Londe, an Assistant Vice President at Moody's, expecting the market to expand in case of no future political or economic upheavals, cementing profitability to post-revolution performance.
The rating agency further forecasted the market to benefit from a number of large scale infrastructure projects through providing direct insurance cover and because any resulting job creation will support the expansion of the commercial and personal lines of business.
Moreover, the sector's micro-insurance, medical, takaful (Islamic shariah-compliant insurance) and yet-to-be enacted mutual guarantee premiums will be improved as well thanks to the proposed draft bills, including the comprehensive health insurance, the insurance supervision law and other regulations presented by the Egyptian Financial Supervisory Authority (EFSA).
However, the sector still faces a number of serious challenges, including high sector concentration as the top six players in the sector account for 69% of total premiums according to 2015 financials, while the rest of the market is fragmented. This could lead to "unfavorable pricing practices and operating performance volatility, especially among the smaller players", according to the report.
The Egyptian insurance market is the second largest in North Africa, a region that accounted for roughly 0.2% of global insurance premiums in 2015.
By the end of June 2015, gross premiums written (GPW) in Egypt jumped 12.8% to EGP 15.5 billion, according to the latest available data from the EFSA.
