Egypt: Insurance federation looks into creating disaster insurance pool
Source: Middle East Insurance Review | Jul 2023
The Insurance Federation of Egypt (IFE) has formed a committee to study the establishment of a natural disaster insurance pool in the Egyptian market, with the aim of providing insurance coverage against potential natural hazards and protecting state property.
The IFE said that comprehensive disaster risk management (DRM) is a dynamic process in which risk reduction must be seen as a common element. DRM involves adopting policies and strategies to reduce disaster risks, prevent new disaster risks and manage residual risks, all of which contribute to lowering losses. The DRM strategy must cover different layers of risk by deploying different tools to respond to different types of disaster risk in line with the nature of the risk and available resources.
IFE said that the design of disaster risk insurance programmes and the type of support they provide depend on several factors: the type of insurance coverage provided; the scope of catastrophe risks; coverage of policyholders as well as the importance of the programme as a protection tool; the pricing structure or premiums payable under the programme; and the participation of the public sector.
Several players in the insurance market in Egypt had been pressing the authorities to set up a compulsory insurance pool to cover climate change disasters.
The calls were made as a sandstorm hit Egypt in June, causing strong winds and thick dust to sweep across Cairo. One person died and five others were injured when a billboard collapsed.
At present, disaster insurance in Egypt is offered as a rider to motor, fire and engineering insurance policies.
Cairo University department of insurance and actuarial sciences head Mohamed Gouda said that an insurance pool would reduce the loss suffered from Nat CAT by a single insurer and distribute the risks to several insurers that are members of the pool. M