Egypt: Insurers recommend mandatory fire cover for shops
Source: Middle East Insurance Review | Jul 2016
The Fire Insurance Committee of the Insurance Federation of Egypt (IFE) has recommended that insurance be made compulsory for commercial shops to cover fire, theft and other risks such as natural disasters including earthquakes, said media reports. Compliance should be monitored by government authorities responsible for licensing these businesses, according to the proposal.
The Vice President of the committee, Mr Waleed Sayid Mustafa, said that the fires which occurred lately in Egypt were caused mainly by electrical short circuits.
The committee’s recommendation followed a spate of fires in the country, the worst of which was the fire which spread through the busy El-Rewaiei market in downtown Cairo in May. The fire engulfed the historic market which housed around 240 shops. Many were unlicensed operators. At least three people were killed and more than 90 injured in the fire. Preliminary estimates place economic losses at EGP500 million (US$56.3 million).
In the last fiscal year ended 30 June 2015, fire premiums in the country totalled EGP1.35 billion, 11% higher than the EGP1.22 billion seen in 2014. Overall direct premiums amounted to EGP15.5 billion last year, of which non-life insurance accounted for EGP8.1 billion.
Among the 17 non-life insurers which offer fire insurance, 10 made a profit in this branch of business in FY2014-15 while the remaining made losses. The combined net profit in the fire branch for FY2014-15 stood at EGP115 million.
Fire accidents are common in Egypt, given the condition of buildings and failure to adhere to safety standards. Last November, the Reinsurance Committee of the IFE highlighted heavy losses in the fire branch. It said that losses amounted to 187%, which would force international reinsurers to withdraw from the Egyptian market.
EGP1 = US$0.11