Egypt has enshrined sustainability in its Vision 2030 blueprint for development. The vision, also called the sustainable development strategy, embraces three dimensions: Economic, social and environmentally sustainable development.
In 2018, Egypt’s government updated its sustainable development agenda to keep pace with local, regional and global changes and gave greater emphasis to partnership with the private sector to achieve its objectives.
There are eight objectives in various areas to create a competitive and diversified economy. Insurance is an important component of the blueprint and the government has strengthened regulation to support the sector.
Legislation to support sustainability
The new insurance law in Egypt sets the stage for the insurance sector to contribute to building the national social safety net. The legislation will allow for the setting up of specialised insurers in healthcare and microinsurance. Also, it will expand insurance for agriculture, students and state-owned assets.
In 2019, the Insurance Federation of Egypt (IFE), in partnership with the country’s Financial Regulatory Authority (FRA) and with the support of the UN, agreed to develop a national sustainable insurance strategy and action plan by 2020. This roadmap aimed to harness the triple role of the Egyptian insurance industry as risk managers, insurers and investors for economic, social and environmental sustainability.
The IFE has created an action plan to promote sustainability as well as a general awareness guide to sustainable insurance. The federation will include the principles of sustainable insurance for all insurance branches and will guide them on the process to guarantee them within the insurance value chain (product design and management, underwriting, distribution and marketing, customer service and compensation management).
The organisation will also study the challenges of applying the principles of sustainability and present reports on suggested solutions. This includes managing natural risks, climate change, access to all segments of society and affordability of insurance.
Sustainable strategy development
Seminars and workshops will also be utilised as a means to raise awareness of the principles of sustainability in the internal working environment of insurance companies. The IFE will work with the FRA to develop a sustainable insurance strategy in the Egyptian insurance market. The joint effort will also study legislation and challenges to encourage companies to apply the principles of sustainable insurance.
To help its members, the IFE will negotiate services to be at a lower cost for companies wishing to obtain additional services from organisations that can help to apply and measure sustainability initiatives.
The FRA has requested all insurance companies to issue a report on sustainable insurance and this should be incorporated into the annual financial report of each company. This means that all insurance companies will put in the effort to achieve sustainable insurance.
Reducing poverty in the medium term is a major goal. To achieve this, the IFE has launched a microinsurance committee to help develop microinsurance products and create greater awareness. Over the last three years, this has helped to increase the number of microinsurance clients to 6m clients.
Market support from government
The principles of sustainable insurance will be imposed on the Egyptian insurance market sooner or later, either legislatively or through the insurance providers dealing with Egyptian companies. The IFE plans to develop its human capital and provide fair and equal opportunities for its members. It also intends to prepare an annual sustainability report. Training programmes, conferences and seminars will also be used as other initiatives to achieve sustainability.
This means organising seminars and workshops with various partners to raise awareness among insurers operating locally in Egypt, namely insurance brokers, industries federations, chambers of commerce and other entities representing the clients of insurance companies.
For the long term, the IFE is working to respond to global climate change and other environmental challenges. It has helped insurance market players to participate in the Natural Hazard Insurance Pool. The pool is designed to provide capacity to the insurance market to allow them to find ways to provide coverage for natural hazards and climate change. This will be launched after the FRA agrees on the bylaws of the pool. Experienced players in the reinsurance market are also aiding the IFE by providing know-how as well as capacity.
This will allow insurance companies to provide suitable coverage to mitigate the risk of climate change. The IFE has formed an agricultural insurance committee to help develop specialised insurance products to assist this sector. The committee has arranged a webinar for August for Egypt’s insurance market and clients to gather feedback and boost engagement.
The agriculture insurance products are very important in achieving the SDG’s Zero Hunger goal – this pledges to end hunger, achieve food security, improve nutrition and promote sustainable agriculture. M
Mr Alaa El-Zoheiry is chairman of the Insurance Federation of Egypt.