Egypt: Motor committee lays groundwork to ensure proper technical underwriting
Source: Middle East Insurance Review | Dec 2020
The motor committee of the Insurance Federation of Egypt (IFE) has completed preparations for a table of depreciation rates and allowances related to used vehicles, so as to eliminate confusion among vehicle dealers which sell insurance policies, and customers.
The committee was entrusted to carry out this task last year, including researching and studying appropriate mechanisms to implement rules for the proper technical underwriting in the supplementary motor branch.
Because of fierce competition among insurance companies over the acquisition of clients, regardless of whether or not sound underwriting rules are applied, the committee had to develop practical mechanisms through which insurance companies can apply sound technical underwriting rules in order to maintain safe loss rates.
The motor committee confirmed that car agencies and showrooms that sell used cars alongside new vehicles represent a large percentage of customers in this important insurance branch. In particular, vehicle trade-ins have become widespread, giving rise to questions relating to depreciation of used vehicles.
The motor panel prepared a model for the conditions that must be met in repair shops, drafted the format for an evaluation report and set up a system for the classification of vehicle repair centres.
The committee also drew up measures for preparing cadres as vehicle inspectors, the criteria that must be met by inspectors, as well as the specifications and conditions necessary for their appointment. These measures include proposing training for vehicle inspectors on how to identify the causes of vehicle damage and to analyse them, in addition to knowing actual repair costs and the quality of spare parts used. The committee stressed the importance of the calibre of inspectors so as to alleviate losses suffered by insurers due to the weakness of inspectors.
The committee has also drafted a standardised statement of customer loss rates. Rules for the transfer of clients between insurance companies allow insurers to request a statement of the customer’s loss rates. M