The board of the Insurance Federation of Egypt (IFE) has agreed in principle to launch a compulsory motor insurance pool following a recommendation made by the association’s motor insurance committee, said Mr Alaa El-Zoheiry, IFE chairman and managing director of Arab Misr Insurance Group.
The next step is to present the proposal for the approval of the association’s executive council for property and liability insurance, he said. There is also a need to study mechanisms to implement the pool and then obtain the approval of association members, according to a report by Al Masdar.
He explained that the pool is aimed at preventing motor fraud cases and malpractices in compulsory auto insurance.
Mr Ahmed Arifin, managing director of Egyptian Takaful Insurance Company said the pool would reduce the costs and administrative expenses of insurers engaged in compulsory motor insurance, in addition to contributing to increased premiums.
He said the insurance sector has suffered in recent years from fraud in compulsory motor insurance, with payouts made to fraudsters who presented forged documents.
A database of customers in this branch of insurance will also be launched, that could allow centralised issuance of motor policies. This would help in preventing tampering with compulsory vehicle insurance policies and minimising unhealthy price competition.
An attempt was made around seven years ago to launch a compulsory motor insurance pool in Egypt. However, the bid failed because the proposal was not accepted by most insurers. The majority of insurers focused their portfolio on compulsory motor business and had been afraid to lose their business to the pool, said Mr Ahmed Abu Alainain, head of the compensation department of Delta Insurance.
He said several insurers rely on mandatory auto insurance for immediate cashflow, and that this issue can be resolved by distributing the fees and premiums collected by the proposed pool every three months, in accordance with the insurers’ contributions in the compulsory motor branch, provided that the insurers bear compensation payable from this branch in accordance with the percentage of the premiums received from the pool. M