Egypt: Weakening currency leading to higher costs for insurers
Source: Middle East Insurance Review | Apr 2016
The weakening Egyptian pound, which has lost about 10% of its value against the US dollar since the start of 2015, is contributing to losses for insurance companies, particularly in the motor business.
Industry players said that while auto premiums have not increased much, the scarcity of imported auto parts in the market has resulted in their high prices, which are charged to insurance companies in the event of accidents, reported Al Ahram.
Another problem is that auto workshops and maintenance centres have begun to replace original spare parts with other manufacturers' parts or fakes. This affects the vehicle and raises the risk of accidents.
Overall, the Egyptian pound has declined by around 25% against the greenback since the end of 2012, when mass protests took place against the then-Morsi government. The foreign currency crisis has led to a shortage of imported essential goods.
Separately, the motor committee of the Insurance Federation of Egypt will sign a collaboration protocol with the Ministry of the Interior that will allow insurance companies to access data on traffic violations by their customers.
It is hoped that the information will help bring down insurance losses, as it will enable insurers to better assess claims arising from an accident.