Mohammed Omran, Chairman, Financial Regulatory Authority (FRA): Interview

Interview: Mohammed Omran

How has the recent economic volatility affected demand for insurance, and to what extent can the sector contribute to Egypt’s recovery post-Covid-19?

MOHAMMED OMRAN: The insurance sector is one of Egypt’s most important sectors and it has a vital role to play in supporting companies, individuals and the wider economy in the recovery from the effects of the lockdown measures, which had a noticeable impact on income and revenue. There is no doubt that the economic slowdown that accompanied the quarantine period will have an impact, whether it is on the level of demand for insurance products or the number of claims.

In 2020 there has been a sharp decline in demand for insurance products such as travel protection, automotive insurance policies and life coverage. According to the most recent statistics, approximately 73% of medical insurance clients in the life segment and 60% of medical insurance clients in the general segment had full health coverage during the pandemic. For those who were not fully covered, the FRA reached an agreement with insurance companies to cover clients until it can be determined whether they are infected with Covid-19, at the price offered by insurers’ contracts with hospitals if they wish to complete treatment at their expense. We believe that this was a very important step for medical insurance customers in the market, in both the life and general segments.

In what ways can digital tools increase insurance penetration, and which factors are most important to the sector’s digital transformation?

OMRAN: There is no doubt that the current crisis has highlighted the importance of the digital transformation in the value chain of insurance services, whether in terms of promotion, underwriting or claims handling. Prior to Covid-19 some insurance companies were already planning to utilise technology in certain aspects of their services, such as underwriting and claims handling in motor insurance. In addition, companies were increasingly offering electronically distributed policies in segments like travel insurance, temporary life insurance, micro-insurance and personal accident coverage. Therefore, there has been a move increasingly towards digital transformation, and insurance companies are making considerable efforts to prioritise the adoption of new technology, to the extent that the current crisis has accelerated this trend into 2021.

Looking ahead, it is crucial to ensure that customer information remains confidential and protected from hacking and data breaches. In addition, it is important to consider the legal form for online platforms, and their responsibility to protect customer rights, prevent discrimination, fraud and deception, and respond to and resolve complaints. For this reason, these platforms need to have effective business continuity plans in place in the event of any difficulties.

What role does micro-insurance have to play in the government’s efforts to boost financial inclusion?

OMRAN: We believe that micro-insurance is the main way boost inclusivity, alongside closing the protection gap and increasing the uptake of digital technology. Micro-insurance is complementary to many financial products for marginalised and underserviced populations, so it is a necessary part of the government’s efforts to achieve financial inclusion. The FRA has already succeeded in integrating micro-insurance with microfinance products. As a result, in 2019 the FRA focused on developing rules to regulate this activity, which resulted in more than 3.2m individuals being placed under the umbrella of micro-insurance that year.

The FRA also established a joint initiative with insurance companies to speed up the pace of disbursement of claims from individuals and companies during the quarantine period. This was particularly directed towards supporting small businesses, facilitating remote work and creating alternative means of communicating with customers on an ongoing basis.