While Egypt's population has reached approximately 108m, according to recent data from the Central Agency for Public Mobilisation and Statistics, the life insurance penetration rate in the local market remains low at less than 1%, compared to the global average of 7-10%.
Insurance experts have identified several reasons behind the low rate of life insurance penetration in the Egyptian market. These include a lack of insurance awareness among a large segment of citizens, as well as a decline in purchasing power due to the current economic conditions and their impact on customers, reported Amwal Alghad.
They point out that widening the spread of life insurance in Egypt requires an effective combination of awareness, product simplification, and the expansion of technological and digital tools to reach the largest segment of customers. At the same time, the insurance sector has also missed opportunities to expand its customer base and the life insurance penetration rate.
Mr Omar Shelbaya, CEO of AXA Egypt Group, attributed the continued low penetration of life insurance in Egypt to the fact that the majority of citizens view insurance as a secondary priority. He added that another hurdle is the complexity of some life insurance products, and the way they are presented makes them incomprehensible to customers, who are looking for simple and flexible products.
He emphasised the need for the Egyptian insurance market to raise awareness and simplify products to help expand the sector's customer base.
He said that the insurance sector can raise awareness through financial education, media campaigns and partnerships with banks, associations, and civil society organisations, to ensure that insurance reaches new segments of the population who had never previously considered insurance as a part of their lives.
He added that insurers have to provide flexible products that combine protection and investment flexibility, tailored to the changing financial circumstances of customers and meeting their diverse needs. He said, “Insurance companies also play a pivotal role in clarifying the true value of insurance in a simple and tangible way.”
Mr Gamal Sakr, regional director for Northeast Africa and the Middle East at African Reinsurance Corporation, said that the weak life insurance penetration rate in Egypt is due to structural, cultural, and economic factors.
Distribution is concentrated in major urban areas
He explained that structurally, distribution remains limited outside of major cities and urban centres. The market has historically relied heavily on agency sales and bancassurance, rather than digital channels or microfinance institutions, which has limited its reach to many customers.
He pointed out that culturally, many Egyptians view life insurance policies as unnecessary compared to tangible savings or real estate investments, and there is still a lack of financial literacy regarding the benefits of long-term protection and savings. Economically, inflationary pressures and a decline in disposable income in recent years have pushed families to focus more on immediate needs rather than long-term planning.
Mr Sakr also stressed the importance of cooperation between insurance companies and the government by integrating life insurance products into social protection and financial inclusion programmes, leveraging banks, post offices, and mobile phone companies for distribution, and launching national awareness campaigns that contribute to making insurance an integral part of the financial and social infrastructure.
Customer preferences
Mr Mohamed Hussein, head of Reinsurance and Risk at Misr Emirates Takaful Life Insurance, said that consumer preferences that focus on short-term spending rather than long-term financial planning also pose an additional challenge to the life insurance penetration rate, along with the traditional perception that still associates insurance with risk rather than as an investment and savings tool.
He added that financial cost is also a challenge to the spread of life insurance. Some people consider life insurance a luxury, as they prefer to place their money in other areas, such as real estate or savings.
Digital channels
He said that digital channels have contributed to attracting new customers to the sector, particularly young people, especially with the acceleration of digital transformation following the COVID-19 pandemic and the increased use of the Internet and smartphones. However, their effectiveness remains limited, as the use of these channels requires the design of flexible insurance products that suit the needs of different groups and simplify procedures.
He commended the Financial Regulatory Authority's decision to allow insurance companies to promote their products through telecom companies' branches. He suggested integrating insurance services into telecom companies' apps, which would facilitate the insurance subscription process. He also suggested offering packages that include insurance services with telecom packages, which would increase the attractiveness of the offers.