Cairo, Egypt – A new insurance law, aimed at boosting the capital base of insurance companies and introducing compulsory coverage, is expected to transform Egypt’s insurance sector, according to Alaa El Zoheiry, chairman of the Insurance Federation of Egypt (IFE).
Earlier this month, Egypt’s Financial Regulatory Authority (FRA) mandated that insurance companies raise their minimum capital to EGP 600 million (approximately $12 million) within two years. The requirement stipulates an increase to EGP 100 million by the end of the first year. This decision follows extensive consultations between the FRA, the IFE, and other industry stakeholders.
In an interview with Al Arabiya Business, El Zoheiry explained that the capital increase is designed to strengthen the solvency of insurers, enabling them to meet obligations and pay claims. He emphasized that the move will enhance the creditworthiness of companies, opening doors for international credit ratings. Furthermore, he added that the capital boost would help retain more premiums within the Egyptian market, reducing foreign currency leakage and improving the financial stability of local firms.
El Zoheiry noted that most insurers are likely to meet the new capital requirements, although some may need to inject additional funds or merge with other companies to comply.
A New Era for Investment
The new insurance law, passed last July, introduces additional compulsory insurance covers that are expected to expand the sector and attract capital, El Zoheiry predicted. He projected that Egypt’s insurance market would see a significant rise in premiums in the coming years, fostering more investments in the industry. This could include the establishment of new insurance companies or the acquisition of existing ones.
The law also paves the way for the creation of specialized insurance companies, such as those focused on health coverage, diversifying the market and increasing competition. Digital transformation is expected to play a key role in enhancing operational efficiency and reducing costs, further making Egypt’s insurance market more attractive to investors.
As the country strengthens its regulatory framework and capital requirements, the insurance sector is poised for growth, offering opportunities for both local and international investors.
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