Life insurers in Egypt, which are seen as the biggest beneficiaries of bancassurance, are complaining of weak yield from this distribution channel, citing red tape which limits its ability to tap growth opportunities.
Mr Hesham Abd El Shakour, Managing Director of Egyptian Life Takaful Company, said that while the results achieved in bancassurance are acceptable, returns have been lower than expected, reported Al Mal News.
Mr Shakour added that the challenges faced by insurers currently lie in the length of time taken to negotiate terms with banks, in addition to the delay faced in securing approval of bancassurance agreements from the central bank.
Mr Ahmed Salah, Marketing Manager at Delta Life Insurance, said that bancassurance negotiations between banks and insurers centred on fees which insurers would pay banks. Negotiations also include the capabilities of insurers in providing required services to customers in all branches, and not just a number of branches, he added.
Despite the insurance industry’s complaints, things have been improving in bancassurance in Egypt. The authorities re-opened the doors to bancassurance in 2013 after revamping the ground rules for the distribution channel which was suspended for five years from 2008 because of concerns over mis-selling.
Last year, the Egyptian central bank and the Egyptian Financial Supervisory Authority further loosened regulations to allow each bank to have bancassurance arrangements with up to four insurers, namely, one general insurer, one general takaful operator, one life insurer and one family takaful company. Previously, a bank was allowed only to tie up with one general insurer and one life insurer.
In 2016, total premiums in Egypt, including takaful contributions, amounted to nearly EGP24 billion (US$1.3 billion), up from about EGP18 billion the previous year. Growth was driven mainly by life insurance where premiums surged 40% to EGP16.5 billion. M
EGP1 = US$0.05