CAIRO: State-owned insurance companies have urged the Ministry of Investment and industry regulators to increase premiums on the mandatory automotive insurance and to put a cap on claims’ value. The insurers cited recent losses in the mandatory automotive insurance segment as a result of low premiums vis-à-vis the inherent risks.
Nozhy Ghalium, managing director of Al Chark Insurance, said the insurance supervision law forces operators to offer a mandatory automotive insurance that covers the technical and human risks of car accidents. “Although the law itself does not define a specific amount for premiums, the Ministry of Investment and the Ministry of Interior have set prices that are lower than the fair value, without referring to insurers, he said.
He pointed out that such measures have resulted in claims payments of more than LE 471.6 million by the end of 2006, though the total premiums collected from the mandatory auto insurance were less than LE 146.3 million.
Sadek Hassan, managing director of state-owned National Insurance Company of Egypt, called on the government to impose the same rules on private sector insurers, forcing them to offer the mandatory auto insurance policies.
Mahmoud Abdullah of the Holding Company for Insurance earlier noted that state-owned insurers suffered from technical provision deficits estimated at LE 1.9 billion as of the end of 2006. He expected the deficit to exacerbate on the background of total claims settled under the mandatory auto insurance scheme.
