Life and medical insurance in Egypt have been growing steadily despite the challenges that hit the country in the past period and will remain growth drivers in the coming years.
By Osama Noor
Egypt’s insurance market is one of the few in the region in which life business accounts for around half of total premiums and continues to register outstanding growth rates regardless of the difficulties the country has been through.
Health insurance has also been seen notable growth - with over 10% of the market total direct premiums or one fifth of non-life business.
Life insurance remains a growth driver
In the financial year 2021-2020 (ends on 30 June), life and saving businesses reached EGP24bn ($1.25b) against EGP18.5bn in the past year, registering almost 30% annual growth rate, and accounting for 50.6% of the market operations, up from 46.2% in the preceding year. The market’s overall growth rate was 18.5% as GWP reached EGP47.5bn against EGP40.1bn in 2019-2020.
For the first six months of 2022, life and saving business continued to register notable growth and was the main growth driver for the market where it reached EGP16.9bn compared with EGP13.8bn in the first half of 2021, a 22.6% increase against 0.9% registered by the general lines of business.
Therefore, the 13.1% growth rate which the market has achieved in 1H2022 has been driven by the growth accomplished in life and saving.
There are 16 life insurers in Egypt, of which four are takaful operators. By the first half of 2022, six out of the market’s top 10 operators were life insurers.
The annual report issued by the Financial Regulatory Authority (FRA) for 2020-2021 said that there were around 2m life insurance policies issued in Egypt, which is considered a modest figure considering the country’s massive population.
However, compared to the number of policies issued in 2016-2017, which stood at around 1.4m, there has been significant progress made over the five years as the number increased by almost 44%. Life insurance premiums grew from EGP10.2bn in 2016-2017 to over EGP24bn in 2020-2021, registering over 136% increase.
Great prospects for life
There are broad horizons for life and saving business ahead. The results of 1H2022 have shown that life and takaful are two main areas of growth. This was reflected this year as the size of life and saving premiums in 1H2022 jumped by 22.6% to EGP16.9bn compared to EGP13.8bn in the same period the past year. Non-life collected premiums, on the other hand, witnessed a meagre increase of 0.9% to EGP10.76bn.
In a media statement commenting on the progress of life business in Egypt, Insurance Federation of Egypt (IFE) chairman Alaa El-Zoheiry considered that having life insurance business controlling larger share of GWP is a healthy and a positive sign that the market is on the right path.
He said that the huge development that life insurance has seen over the recent past is due to the increased awareness of the need for life insurance coverage, especially post the COVID-19 crisis. He said that the reliability which insurance companies have demonstrated had also increased the public’s confidence in the insurance sector.
Bancassurance activity has also contributed to the growth of the life portfolio in the market as banks became keen on expanding their services to include insurance and other financial services in order to increase financial inclusion.
Takaful, in addition, has been a winner in 1H2022 with gross contributions reaching EGP4.5bn in 1H2022 against EGP2.18bn in 1H2021, 108% growth compared with 3.8% recorded by the conventional players.
Mr El-Zoheiry said that the significant increase in takaful contributions during 1H2022 indicated that there is a new segment of customers that became interested in insurance protection and are looking for shariah-compliant solutions.
Growth in health insurance
Over the past five years, health insurance grew notably to become among the leading branches of business in terms of size of premiums. In 2020-2021, health insurance premiums increased by 9.1% to EGP4.7bn from EGP4.3bn in the preceding year, making it the largest non-life branch of business and the second largest after life insurance business. Compared with 2016-2017, the size of the health insurance portfolio grew by 126%.
The new insurance law which is expected to be applied this year has introduced new rules and regulations for various branches of business including health.
The new law allows the establishment of companies specialised in writing health insurance (mono-liner) with a minimum capital requirement of EGP60m (compared with EGP250m for multi-liner players).
The new law has also stated that TPA should be regulated by the FRA and are required to pay a minimum capital of EGP15m. In the current law, TPAs are not being regulated by the FRA. It is believed that the new law will enhance the efficiency of regulations and improve the level of services. It will also open the door for companies to rollout new products and services.
Look to the future
For both branches of insurance, life and health, the market offers growth opportunities as demand is increasing with the support of factors such as the young population and tendency towards resorting to the private sector for such services. Moreover, microfinance organisations in Egypt are actively working on providing the poor the necessary life and health protection. M