News Middle East13 May 2020

Egypt:Motor insurers optimistic as govt resumes licensing of new cars

13 May 2020

The government's move to resume the licensing of new cars will help revive the motor insurance sector, say a number of insurance experts.

Mr Mostafa Kemal Madbouly, Egypt's Prime Minister, announced the reopening on 26 April of the Interior Ministry's traffic departments for them to issue licences for brand new cars. The ministry had shut the departments from 19 March to 16 April as part of precautionary measures taken by the government to curb the spread of COVID-19.

Insurance consultant Mohamed Al-Ghatrify told Shorouk News that he expected that the resumption of new-vehicle licensing would increase motor insurance premiums by 30% compared to levels seen in the past two months. He said that the suspension of licensing had led to the postponement of motor insurance purchases for new cars.

Mr Alaa El-Zoheiry, chairman of the Insurance Federation of Egypt (IFE), said that the decision to reopen the traffic departments for registering new vehicles will help the insurance industry in its bid to restore normal operations.

He said that insurers had previously suspended covering new cars, because the clients could not obtain licences for the vehicles. Insurance policies stipulate that a valid vehicle licence has to be presented as a prerequisite for compensation to be paid.

For older cars which might have been involved in accidents and whose licences could not be renewed during the lockdown period, the Financial Regulatory Authority issued a letter to insurance companies stipulating that compensation be paid to car owners even if their licences could not be renewed.

Mr Ibrahim Labib, head of the motor insurance committee of the IFE, said that the decision will lead to the restoration of motor insurance premium rates to their normal level.

He said that motor insurance premiums had been greatly affected in recent months. He added that motor rates rose at the beginning of this year, boosted by an increase in car sales, which was a result of a decline in exchange rates and low interest rates, which encouraged customers to take out loans to buy cars.
 

 

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