Egypt: Motor insurers optimistic as govt resumes licensing of new cars
Source: Middle East Insurance Review | Jun 2020
The government’s move to resume the licensing of new cars will help revive the motor insurance sector, said a number of insurance experts.
On 26 April, Egypt’s Prime Minister Mostafa Kemal Madbouly announced the reopening of the Interior Ministry’s traffic departments for them to issue licences for brand new cars. The ministry had shut the departments from 19 March to 16 April as part of precautionary measures taken by the government to curb the spread of COVID-19.
The resumption of new-vehicle licensing is expected to increase motor premiums by 30% compared to levels seen in the past two months, insurance consultant Mohamed Al-Ghatrify told Shorouk News. He said the suspension of licensing had led to the postponement of motor insurance purchases for new cars.
Insurance Federation of Egypt (IFE) chairman Alaa El-Zoheiry said the decision to reopen the traffic departments for registering new vehicles will help the insurance industry in its bid to restore normal operations.
He said insurers had previously suspended covering new cars because clients could not obtain licences for the vehicles. Insurance policies stipulate that a valid vehicle licence has to be presented as a prerequisite for compensation to be paid.
For older cars which might have been involved in accidents and whose licences could not be renewed during the lockdown period, the Financial Regulatory Authority issued a letter to insurers stipulating that compensation be paid to car owners even if their licences could not be renewed.
IFE head of the motor insurance committee Ibrahim Labib said the decision will lead to the restoration of motor insurance premium rates to their normal level.
He said motor premiums had been greatly affected in recent months. He added that motor rates rose at the beginning of this year, boosted by an increase in car sales, which was a result of a decline in exchange rates and low interest rates, encouraging customers to take out loans to buy cars. M