Dr. Omran: We will not stop at developing the first actuarial life table in Egypt, but rather we will strive to update it at intervals of 3 or five years continuously
Dr. Omran: Achieving a growth rate in the life insurance market of 26.3% in the past year encourages subscription to life insurance policies according to sound Egyptian actuarial tables
Advisor to FRA’s Chairman for insurance affairs : Actuarial Life Tables will give life insurance companies a variety of opportunities to develop their products , reconsider pricing and calculate the reserves to be set aside
Dr. Mohammed Omran – FRA’s Chairman announces the beginning of the operational steps to establish the first Egyptian actuarial life table that serves life insurance industry, that is after signing a contract with one of the largest international consultancy firms specializing in actuarial experience at the end of last month. Such step comes within the framework of ” Markets development ” axis stated in the comprehensive strategy for the development of non-banking financial markets 2018-2022.
FRA’s Chairman says that creating an Egyptian actuarial table for the first time is one of the main steps to develop the Egyptian life insurance market and increase its efficiency, adding that life insurance companies in Egypt still depend – up to this moment – on English actuarial tables which have been set since the middle of the last century to price their products. It does not accurately represent the Egyptian life insurance market and consequently this affects the market’s ability to keep pace with the global development upon pricing various insurance products.
According to Omran, financial indicators of the insurance industry in Egypt indicate that the total premiums of insurance companies amounted to 35.2 billion Egyptian pounds at the end of June 2019 with a growth rate of 19.3% compared to 2018. Of these, approximately 15.4 billion Egyptian pounds are the total premiums of life insurance branch ( Long-term investments) with a growth rate of 26.3%. The number of insurance companies operating in the Egyptian market has reached 39 insurance companies, of which 15 are life insurance companies.
Dr. Omran explains that he has previously issued a decision – in the second quarter of 2019 – to form the Egyptian committee that will create the first actuarial table in Egypt headed by Mr. Hisham Ramadan, Advisor to FRA’s Chairman for Insurance Affairs. The committee includes actuaries from major life insurance companies which represents 80% of the market in Egypt, that is besides a number of FRA’s actuaries to form the technical secretariat of the committee. They are assigned to collect, check and verify the data and update the tables in the future.
FRA’s Chairman adds that he has assigned the Egyptian committee to prepare a brochure of terms and technical specifications for the implementation of the project. This will include creating tables of death rates, total and partial disability, critical disease to develop insurance products that will protect the income in case of illness. Besides, covering such population segments as seasonal labors that may be exposed to a sudden drop in income due to illness , noting that these products are not currently available at most companies.
Hisham Ramadan ,Head of the Egyptian Committee for creating and Studying Actuarial Tables established in accordance with FRA’s Chairman decision No. (1194)of 2018, reveals that the Committee has launched a global tender to which the largest global consulting companies for actuarial services were invited from the United States of America, the United Kingdom and European countries to submit their technical and financial offers in the light of brochure on the Committee’s terms and conditions. The Committee also received five offers from actuarial consultants from all over the United Kingdom.
At the end of last year, the committee finished the evaluation and arrangement of the consultative firms and chose the consulting office Barnett Waddingham as the winning office for the implementation of the project. The contract was signed at the end of May 2020 in a virtual meeting through the video conference feature announcing the launch of the project. The project is funded by the African Reinsurance Corporation ( Africa Re) in accordance with a cooperation protocol with the Authority.
It is worth noting that Barnett Waddingham consulting office has been working in the actuarial services field for more than thirty years in the United Kingdom and it provides actuarial services to all entities related to the Institute and Faculty of Actuaries (IFoA). Also, it is specialized in conducting analytical research of deaths and diseases and then introduces practical tools, the most important are actuarial tables widely used by actuaries.
Ramadan adds 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. In addition to achieving better and stronger protection for policyholders’ rights through more accurate calculation of mathematical reserves and actuarial models for life insurance policies. The committee also aims to provide training for actuarial cadres in Egypt on the methods used in creating and updating these actuarial tables to keep pace with international actuarial standards.
The committee expects that during the implementation of the project, life insurance companies ’challenges may be dealt with in depth, as the stage of collecting and examining the project’s data revealed weaknesses in the way life insurance companies keep data. Thus, a database model shall be designed and be available at all companies. Companies are obliged to establish that database to facilitate the role of the committee in updating the actuarial tables and ensuring the calculation of the financial allocations in the future.