LONDON--(BUSINESS WIRE)--While Egypt’s insurance market is proving resilient in the face of the country’s challenging economic conditions in 2023, the continuing rise in interest rates and inflation means that insurers are finding it difficult to sustain growth rates in real terms, according to AM Best.
In its new Best’s Special Report, “Egyptian Insurance Market: Growth in Spite of Difficult Economic Conditions,” AM Best also comments on how legislative changes and the introduction of new accounting standards in 2023 are expected to impact Egypt’s insurers. A new Insurance Act is expected to be approved, with a key provision of the act being the introduction of higher minimum capital requirements for insurers based on the lines of business written. AM Best expects this to be positive for the overall capital adequacy of the sector, while smaller insurers who do not meet the requirements may face significant pressure to merge if they are unable to raise sufficient additional capital.
In addition to new legislation, insurance companies in Egypt are also adopting new accounting standards—IFRS 9 and IFRS 17. In contrast to other insurance markets, where regulators have allowed insurers to delay IFRS 9 implementation so as to be aligned with IFRS 17, the Financial Regulatory Authority has required Egypt’s insurers to implement IFRS 9 in advance of IFRS 17. Currently, there is an expectation that the implementation of IFRS 17 will be complete by 30 June 2024, following the implementation of IFRS 9 in 2022. The two-year gap is seen as sufficient to allow Egypt’s insurers to deal with any implementation challenges that they might face.
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