The Financial Regulatory Authority (FRA) has started the implementation of Egypt’s first actuarial table to serve the country’s life insurance industry.
The step comes after the authority directly contracted, at the end of June, with one of the largest international advisory entities specialised in actuarial calculation.
FRA Chairperson Mohamed Omran said the project is one of the main steps in developing Egypt’s life insurance market and increasing its efficiency. Life insurance companies in Egypt still depend on English actuarial tables that go back to the mid-20th century in pricing insurance products.
With these tables not an accurate representation of the local life insurance market, this affects the market’s ability to keep pace with global developments in pricing insurance products.
Egypt’s insurance companies reported total premiums amounting to EGP 35.2bn at the end of June 2019, with a growth rate of 19.3% compared to 2018. The life insurance branch, which reflects long-term investments, accounts for approximately EGP 15.4bn of this amount, at a development rate of 26.3%. There are now a total of 39 insurance companies operating in the Egyptian market, of which 15 are operating in life insurance field.
Omran added that he has instructed for a committee, which is behind the actuarial table’s creation, to prepare a brochure of terms and technical specifications for the project’s implementation.
This would include creating tables of death rates, total and partial disability, critical diseases, and sickness to develop insurance products to protect income. This would cover such population segments as seasonal labourers that may be exposed to a sudden drop in income due to illness. These products are not currently available at most companies.
Hisham Ramadan, head of the Egyptian Committee for Creating and Studying Actuarial Tables, revealed that Barnett Waddingham Consulting Office was selected as actuarial consultants to the project.
The UK-based company’s selection came following a global tender resulted in the submission of five offers for actuarial consultants, all from the UK, with the winning bid contracted at the end of May 2020.
Barnett Waddingham has over 30 years experience in the UK’s actuarial services field, specialising in conducting analytical researches on deaths and diseases. It has introduced a range of practical tools, the most important of which are widely used actuarial tables.
Ramadan added that the Egyptian committee seeks to play a similar role in Egypt to enhance life insurance company capabilities to price insurance products accurately. This aims to ensure fair pricing, while creating new products that serve different groups of society.
