Read Full Magazine Here. The Insurances market in Egypt is expected to reach a projected market size (gross written premium) more than US$ 2bn in 2025. Among the different segments, Life insurances expected to be 51% of the market in 2025.
Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), emphasized that the Egyptian insurance sector is well-positioned for significant growth, driven by innovation, customer experience improvements, and efficient pricing. During a recent meeting with leaders of the insurance industry, Farid outlined the FRA’s upcoming initiatives to enhance the sector’s capabilities and broaden its impact.
It is important to add that progress is being made toward completing the electronic link with insurance companies, an important step to improve operational efficiency. He reiterated that pricing efficiency remains a key priority, vital for expanding insurance coverage and ensuring sector stability.
Hence, the insurance sector in Egypt is set for robust, double-digit growth over the forecast period, albeit from a very low base.
Moving forward, Moody’s RMS Estimates Insured Losses to Date for the January 2025 Los Angeles Firestorm Will Likely Range Between US$20 Billion and US$30 Billion.
The estimate reflects insured losses to date for the private market and California FAIR Plan from fire, smoke, and evacuation impacts from the five fires including the Palisades and Eaton Fires. If these estimates hold true, this would be the costliest wildfire disaster and one of the costliest natural disasters in U.S. history.
Natural disasters impose severe hardships on families and communities, and our thoughts are with those affected by the wildfires in Southern California. These events can also impact broader economic conditions.
With apartment vacancy rates below 5%, the Los Angeles County real estate market was already tight. As the fires exacerbate the supply-demand imbalance, local rents should rise further. However, rent measured in the CPI index reflects an average across geographies. Barring a broader spike in national rents, the inflationary impacts should be negligible.
Disasters like this highlight a broader challenge facing U.S. households: as natural disasters become more frequent and destructive, property and casualty insurers in at-risk areas may refuse to offer policies. Property values in affected areas will likely fall, although the rising cost of insurance could push prospective homebuyers elsewhere. With housing supply already limited, this could pressure national home prices even higher, pushing more Americans into the rental market and further from homeownership.
In 2024, the number of global mergers and acquisitions (M&A) deals valued over $100 million increased by 15%, rising from 619 in 2023 to 710, according to WTW’s Quarterly Deal Performance Monitor (QDPM).
Recently, the Financial Regulatory Authority (FRA) issued a decision to increase the minimum capital of insurance companies to enhance financial solvency and as part of the implementation of the Unified Insurance Law. Insurance companies are required to increase their capital to EGP600m ($11.9m) within two years.
Saying the above, it is important to know that Alaa Mohamed Aly ElZoheiry earned his Bachelor’s Degree in Business Administration at Sadat Academy of Management Sciences, Faculty of Management in 1986, and received his Postgraduate Diploma from the Department of Non-Life Insurance at Cairo University in 1989.
El Zoheiry has been in the Insurance market for more than 33 years. He also gained experience in professional indemnity insurance in the US market. Starting with ACE Egypt as a Technical Manager in 2001 and heading Arab MISR Insurance Group – GIG Egypt Now as a Managing Director since 2005.
Alaa El Zoheiry is: 1. Chairman of the Insurance Egyptian Federation of Egypt since 2017. 2. Ex-President of the FAIR Organization “pronounced on the 20th of September 2021”, and was Vice Chairman of the FAIR Organization since 2018 3. The Ex-Chairman of the General Arab Insurance Federation (GAIF) in Sept. 2014 and representing the Egyptian insurance market in GAIF since 2008. 4. Member of the American Chamber of Commerce in Egypt (since 2005) and Chairman of the Chamber’s Insurance Committee (since 2008). 5. Vice Chairman of Egyptian Takaful –Life/gig since 2011. 6. Board member of the gig – Jordan since 2009. 7. Board member of Gulf Sigorta –Turkey- since 2016. 8. Chosen as the best Insurance man in Egypt in 2014. 9. Personality Insurance of the Year 2017 for the Middle East. 11. Professional of the Year 2021 MENAIR AWARDS 12. Insurance CEO of the Year 2022 from African Insurance Award 13- Insurance Professional of the Year 2024 MENA II Awards.
Noting the above, the renowned Alaa El-Zoheiry, rejoins BUSINESS LIFE reporter for an exclusive interview discusses the state of the local, global and regional reinsurance markets, opportunities for growth in Egypt, disruptive factors, the influence of new insurance regulations and his insights on the year 2025, and the internal and external challenges that Egypt faces due to neighboring wars.
BL: Firstly, I would like to congratulate you on IFE’s 70 years of outstanding success. What can you tell me about the 70th Anniversary of the Insurance Federation of Egypt, which will take place at 6:00 PM on Tuesday, 11th of February 2025, at St. Regis Hotel, The New Administrative Capital? What about the preparations and attendance? How will you make your event memorable?
Alaa El Zoheiry: Thank you for visiting us at the Insurance Federation of Egypt. It’s truly a pleasure to have you here, and we value your cooperation and participation in our events, which are very important to us. The Insurance Federation of Egypt is one of the oldest insurance federations in the region, not just in the Arab world but also in Africa. We have been operating for over 70 years—71 years to be exact. To celebrate this milestone, we are preparing an exceptional celebration.
We will recognize the efforts of the ex-chairmen of the Insurance Federation of Egypt by inviting them to the celebration and honoring their contributions. Although many of them have passed away, we will invite their families to participate, which adds a personal touch. It’s important for their families to know that their loved ones made significant contributions to the federation and the market.
Additionally, we will recognize the efforts of the secretary-generals of the IFE, most of whom are still alive. We will also invite the families of those who have passed away. The secretary-generals are the true dynamo of the federation, running the daily operations, so it’s essential to acknowledge their hard work.
We will also invite long-serving staff members who have been with the federation for over 30 years. The event will feature a nice dinner and a performance by an Egyptian singer, making it a memorable and elite celebration. We’ve invited the regulator’s chairman, some ministers, and received confirmations from six ministers. The prime minister, unfortunately, won’t be able to attend but has delegated the chairman of the FRA to deliver his message.
In summary, this event will be a simple yet elite gathering with selected attendees, including media representatives, to celebrate one of the oldest federations in the region and Africa, recognizing the efforts that have supported the market.
BL: Secondly, I would also like to extend my congratulations to you for GIG Egypt winning the “Best General Insurance Company 2024” at the MENA IR Awards 2024. How did you achieve this prestigious award? Surely, such an award requires considerable effort and experience from both the leader and the team, don’t you agree?
Alaa El Zoheiry: Yes, indeed, we actually won three prizes: insurance of the year for commercial lines, personal lines, and I personally won the professional insurance of the year at the MENA II Awards. The ceremony took place in Dubai on Thursday, 23rd January 2025, and had 27 categories. Winning these awards was a pleasant surprise for me.
Although I was one of the judges, I did not judge the categories in which we participated, which was fair. The event was well attended by regional insurance and reinsurance companies, brokers, and third-party administrators. It was an elite celebration lasting three and a half hours. I had the pleasure of meeting many friends and colleagues in Dubai, and receiving the three awards was a remarkable recognition of our company’s efforts over the past year.
BL: It’s not a surprise. You know yourself; you are confident in your remarkable achievements, especially in the significant growth of GIG – Egypt. Do you agree with me?
Alaa El Zoheiry: Yes, Alhamdulillah, we are one of the largest insurers in Egypt. We consistently achieve excellent results, which are recognized by our board, owners, and shareholders.
BL: What about the economy of Egypt? And what about the situation of the Egyptian insurance companies?
Alaa ElZoheiry: Yes, the economy of Egypt has experienced significant ups and downs over the past few years. However, we have seen growth, even if it hasn’t met our expectations. Compared to countries that have shown no growth, including some in Europe, Egypt has continued to demonstrate resilience and growth, even during the pandemic. This year, the IMF expects Egypt’s growth to reach between 3.6% and 4%, which is commendable given the global crises and conflicts.
Despite the challenges in the Arab world and neighboring regions, such as the Gaza Strip, Lebanon, Sudan, and Libya, Egypt has continued to support these countries while also focusing on local development and protection. Over the past five to seven years, Egypt has undertaken significant construction projects, including the development of 22 new cities, which is remarkable. The investment of over $550 billion in infrastructure has resolved issues like electricity shortages, ensuring a stable 24-hour supply.
Attention has also been given to the microfinance sector, benefiting millions of Egyptians, particularly women, who have received microloans ranging from one pound to 250,000 Egyptian pounds at reasonable interest rates. This initiative has positively impacted many lives and helped the government monitor and improve financial inclusion. By providing microloans, the government has gathered valuable data on recipients, aiding in the formalization of the economy.
The insurance market has also benefited from these developments, with the creation of micro-insurance products tailored for microfinance recipients. The economy is doing well, and the government has involved the private sector in decision-making processes, issuing decrees and consulting experts in various fields. Privatization efforts are underway, allowing the private sector to acquire government-owned properties, reducing competition and fostering growth.
Tourism has seen a significant boost, with the number of visitors increasing from 10-11 million to 15.7 million. The government has simplified visa procedures, attracted more tourists and boosted the economy through foreign currency inflows. This growth has positively impacted various sectors, including restaurants, transportation, and hotels.
The insurance market has grown steadily, with an annual growth rate of 25-30% since 2017. The introduction of a new law in 2024, signed by the president, has further strengthened the market. This law includes eight compulsory schemes, such as professional liability for doctors, lawyers, and accountants, as well as comprehensive general liability for public places. The law also allows the Financial Regulatory Authority (FRA) to propose additional compulsory schemes with the prime minister’s approval, streamlining the process.
Additionally, it will encourage investors interested in entering the market. When investors see that the capital requirements are low, they perceive the insurance companies as small and fragmented, making it difficult to sustain competition. Consequently, they may hesitate to enter the market due to the intense competition. However, if the capital requirements are high, only serious investors will remain in the market, and others will be attracted to invest. This decision is expected to draw more Foreign Direct Investments (FDIs) into the insurance sector.
Furthermore, the capital requirements for insurance brokers have been increased from 2 million to 5 million Egyptian pounds, ensuring the presence of well-established insurance brokers. The new law also permits the establishment of specialized insurance companies, such as medical insurance companies, with a minimum capital of 70 million Egyptian pounds. Similarly, micro-insurance companies must have a minimum capital of 40 million Egyptian pounds. These measures are designed to facilitate market growth and enhance its financial solidity.
Compulsory schemes will further contribute to market expansion. The increased capital requirements will strengthen the market, providing stability and resilience. I believe that all these factors combined will significantly assist the market in growing and becoming stronger.
BL: What can you tell me about the LA wildfire insured losses of $30bn to $40bn, especially considering that most of the losses are to residential properties, and many of the affected properties are high-value homes worth millions of dollars?
Alaa ElZoheiry: Yes, the incident in Los Angeles was truly unfortunate. The fire started, and then strong winds caused it to spread over a vast area. As you mentioned, it caused extensive damage to numerous properties, particularly residential homes, many of which are high-value. Fortunately, these properties were insured, which will provide some relief.
However, this event will have a significant impact on the insurance market, not only in the U.S. but also in Europe. We don’t yet have the final figures, but it is estimated that the losses could exceed $40bn. The evaluation of losses is ongoing, as it’s not only about the buildings but also their contents, many of which are very valuable. My feeling is that the total losses could even be double the current estimates, making it a severe disaster.
Hopefully, such an incident will not happen again, although there are concerns about the possibility of recurrence. Estimates suggest that the total economic losses could reach $100 million, while the insured losses, as you mentioned, might be between $30bn to $40bn, or possibly more.
The U.S. insurance market is highly advanced, and most people there insure voluntarily. However, this tragic event highlights the importance of compulsory home insurance. In countries like ours and across the Arab world, home insurance should not be voluntary. If left to individual choice, when a catastrophic event like the LA wildfire occurs, people turn to the government for assistance, placing a heavy burden on the state. We need to recognize that insurance is a crucial solution.
In Morocco, there is currently a study considering compulsory home insurance, which is a positive development. Similarly, in Turkey, there has been discussion about this. Compulsory coverage for fire, water flood, and basic work should be implemented across the Arab world for residential properties. This initiative should be taken up by insurance federations and regulators and included in their agendas.
The disaster in LA showed that even wealthy individuals suffered significantly. The firefighting resources in the U.S. were overwhelmed. Imagine if such a disaster happened in a less developed country or an Arab nation—there would be even fewer resources to manage the crisis. We must understand that insurance policies are the solution.
Insurance companies should also contribute by allocating 20% to 30% of the collected premiums to enhance fire brigades and improve risk management. This could be a project managed by federations and regulators. It’s time to learn from the LA incident and take decisive action to make home insurance compulsory.
BL: Are you going to raise this point at your forthcoming IFE 4th Microinsurance Conference in Luxor 2025?
Alaa ElZoheiry: Yes, of course. We will hold the IFE 4th Microinsurance Conference in Luxor during April 2025. We can discuss this topic, but we will mainly address it at the Sharm El Sheikh conference in November 2025. This will be one of the subjects we cover.
BL: Aren’t you going to raise this point with your government?
Alaa ElZoheiry: Certainly, we will do our due diligence. If you have followed the IFE website recently, we issued an article on the LA fire. It’s very informative and includes some recommendations, as we believe it’s our role to enlighten the public and raise awareness. The recent newsletter about the LA fire is very well-received.
BL: Does smoke damage count as fire damage?
Alaa ElZoheiry: Yes, of course.
BL: Do you believe that favorable insurance market conditions will continue?
Alaa ElZoheiry: No, I think the renewal for January this year was quite good, despite the numerous catastrophic events last year. The total amount of claims for the cat market was around 300 billion US dollars, which is substantial. However, during the renewal season in January 2025, most prices remained stable with only slight increases for catastrophic coverage. The real issue, I believe, is capacity. If we continue to witness more catastrophic claims worldwide, not in a particular area, capacity could shrink further.
The cat bond market is very active these days, which helps provide more capacity to the insurance market. Overall, the reinsurance market renewal was not as tough as we anticipated, which is positive for seeding companies like ours. We also observed changes in the structure of annual treaties. Most insurance companies now prefer quota share treaties over surplus treaties. This shift towards quota share means seeding companies and underwriters need to do more risk management and technical work, which is beneficial. The Financial Regulatory Authority (FRA) shows indecision to increase, as you mentioned.
BL: What do you say about Global M&A activity being up 15% in 2024, led by a surge in large deals? How is the situation in Egypt?
Alaa ElZoheiry: I think many people, especially in the Middle East, are discussing M&As because of the capital increase potentially leading to more M&As or acquisitions in Egypt. In my opinion, over 90% of the insurance market will be able to increase their paid-up capital. We might see around 5% to 10% of companies preferring not to increase their paid-up capital, potentially leading to acquisitions or mergers.
In general, mergers and acquisitions are beneficial if there are valid reasons behind them, such as enhancing the company’s solvency or expanding business in specific areas. However, I don’t foresee this happening frequently in Egypt. Recently, we saw one case where a company was sold and merged with another, GIG and AIG, which was a small operation. The increase in paid-up capital might encourage companies to merge and form stronger entities.
We need to establish steady, strong, and solvent companies in the Arab world and Egypt. We don’t want to see small, weak companies. Instead, we want companies with robust financial positions capable of competing on a technical basis and providing better service with a diversified portfolio. If we adopt this mindset, we could see more mergers. However, if people remain content with the status quo, it’s not going to work.
BL: Motor insurance is a booming market. How is it in Egypt?
Alaa ElZoheiry: Motor insurance in Egypt is the primary line, accounting for about 40-45% of the market’s portfolio. The combined ratio is not particularly impressive, running at around 95-96%. We could improve this by changing our underwriting approach, which has traditionally been based on the car’s value and type, without considering the driver.
We need to factor in the driver’s behavior, as they play a crucial role in accidents. Cooperation with motor traffic authorities is essential to gather data on drivers, including their claims history and accidents not reported to insurance companies. Data is vital for making informed decisions about rates.
The regulator has requested information about car owners, drivers, IDs, phone numbers, and more, to have comprehensive data. To improve the bottom line, we need a modern approach to motor business - Telematics- , as it’s a significant part of the market’s portfolio. Inflation, the rising cost of spare parts, and the increasing value of motor vehicles due to the dollar’s fluctuation against the Egyptian pound are factors affecting the bottom line.
Insurance companies should be aware of these factors and take appropriate action. Shareholders should push the board of directors to review the motor portfolio, implement changes, and apply deductibles where necessary. Driver behavior should be the primary factor in pricing, not just the car’s value. New techniques like telematics can enhance the motor portfolio.
BL: What would you like to add?
Alaa ElZoheiry: I want to thank you again for being a positive and active partner of the Insurance Federation of Egypt (IFE). Your contributions are invaluable, even when you’re not present at events. The Egyptian insurance market is poised for growth in figures and premiums. The Financial Regulatory Authority (FRA) is working tirelessly to enhance the market, focusing on digital transformation and corporate governance. These efforts will make the market more profitable, appealing, and attractive to investors.
BL: Since you joined the Insurance Federation of Egypt, what improvements have you made, and what are your future plans?
Alaa ElZoheiry: We have achieved a lot. We introduced a weekly newsletter to provide market information, distributing over 10,000 copies locally and regionally. We organized numerous conferences and provided online training and awareness on microfinance. We also established several technical committees, such as IT, digital transformation, sustainability, and compliance, to support the insurance market.
Our efforts have showcased the positive aspects of the Egyptian insurance market, attracting investors. If I continue at the federation, I will strive to do more. If not, I will assist my successor in every possible way. Indirectly, we’ve also promoted tourism by attracting international and Arab insurance professionals to Egypt.
I’m pleased to announce that for the first time, the AUMI conference, a renowned marine conference, will be held in Egypt in cooperation with the IFE in May this year. Additionally, the Munich Re Foundation Group has confirmed their partnership in our microfinance conference in Luxor in May. These developments demonstrate the success of our efforts and the positive impact of our leadership.
