The reinsurance committee of the Insurers Federation of Egypt (IFE) is undertaking a study on natural catastrophe bonds, in cooperation with the Financial Regulatory Authority (FRA).
The study covers operating mechanisms, investment opportunities, and the added value that CAT bonds can bring to the Egyptian insurance sector, while also anticipating the challenges that must be overcome, said the IFE in its weekly newsletter issued on 17 August.
The IFE said that CAT bonds represent a qualitative shift in financial instruments that enhance the resilience of insurance and reinsurance companies in the face of major challenges arising from natural disasters and systemic risks. These bonds are not only an innovative means of transferring risk to capital markets, but are also a fundamental pillar for ensuring market stability and preserving companies' ability to fulfil their obligations to their customers, even during the most difficult crises.
Learning about such advanced financial instruments and leveraging successful international experiences is an important step toward building a stronger and more sustainable insurance market.