Insurance pools should be established for the oil and aviation sectors to be contributed by all non-life companies so that no one player monopolises these two classes of business, especially as the degree of risk is high and losses are huge, suggested a senior executive of Delta Insurance.
He explained that the petroleum and aviation sector is a monopoly of Misr Insurance Company because of its longstanding presence in the market and high financial solvency.
He added that the petroleum sector is divided into two parts: the first are foreign oil companies which insure overseas and the second are Egyptian companies, particularly small companies that are newly established and that need insurance support.
Mr Ahmed Arifin,managing director of Egyptian Takaful Insurance stated that the establishment of risk pools depends on three main goals:
- to distribute high risks among individual insurance companies,
- to increase the retention of premiums in the Egyptian market, and
- to increase insurance awareness.
Experts added that the integration of insurance companies with low absorptive capacity into a unified group will contribute to the establishment of a high-solvency entity to cover risks, reported Al Masdar.
Mr Hammam Badr, managing director of Iskan Insurance, said that insurance pools allows the sharing of expertise to cover specific risks that are difficult for insurance companies to provide individually. He added that the launch of such pools depends on risks that are essential as a social service, but are turned down by insurers, with the external reinsurance market not supporting local insurers to cover these risks.
In recent years, the Egyptian market has seen the formation of a number of risk pools, with the newest being the Compulsory Motor Pool. Older pools include one covering trains and subway accidents.
Mr Alaa Al-Zoheiry, chairman of the Insurance Federation of Egypt, has announced previously announced that the association would soon announce the first insurance pool covering natural disasters. In addition, the Financial Regulatory Authority is considering launching an agricultural insurance pool.