Growth in Commercial Construction Industry in Egypt to Drive Non-Life Insurance Segment, Reports Timetric

18 Sep 2012 • by Natalie Aster

The Egyptian non-life insurance segment was majorly influenced by increases in GDP, automobile sales and the commercial construction industry. The rise in the number of road accidents also indirectly supported the growth of the segment which increased from EGP2.66 billion (US$464.4 million) in 2007 to EGP4.3 billion (US$720.6 million) in 2011 at a CAGR of 12.8% during the review period. Growth in the commercial construction industry is also expected to influence the Egyptian non-life insurance segment over the forecast period. The growth in Egyptian GDP, which is expected to increase further over the forecast period in the presence of liberalization, is expected to drive the growth of the non-life insurance segment which is anticipated to increase from EGP4.3 billion (US$720.6 million) in 2011 to EGP7.3 billion (US$1.2 billion) in 2016, at a CAGR of 11.4% over the forecast period. Motor insurance accounted for the largest market share of Egyptian non-life insurance segment during the review period, in terms of gross written premium, followed by property insurance in 2011, and is expected to continue its domination over the forecast period.

The significant rise of the Egyptian commercial construction industry supported the growth of the non-life insurance segment during the review period. The industry, which grew at a CAGR of 13.6% during the review period, is expected to grow at a CAGR of 7.1% over the forecast period. According to the report “Non-Life Insurance in Egypt, Key Trends and Opportunities to 2016” by Timetric, the Egyptian infrastructure industry is considered to be one of the largest in the region. The construction market, which grew at a CAGR of 13.9% during the review period, is expected to grow much faster than commercial construction at a CAGR of 9.9% over the forecast period. Considering the growth of the overall Egyptian construction industry, the Egyptian property insurance category, which was the second largest category in the non-life insurance segment, is expected to grow at a CAGR of 9.5% over the forecast period. A rising disposable income and increasing middle class population will also support the growth.

Motor insurance accounted for the largest share of the Egyptian insurance industry during the review period in terms of written premium. The rise in the number of road accidents increased consumer awareness of motor hull and motor third-party liability insurance. The total number of road accidents in Egypt reached 125,000 in 2010 while the average number of road accident fatalities per 100,000 motor vehicles reached 188 in the same year, a much higher figure than in other countries in the region.

During the review period, the Egyptian Per Capita Annual Disposable Income (PCADI) registered an increase from EGP9,428.67 (US$1,716.02) in 2008 to EGP13,530.53 (US$2,266.36) in 2011 at a CAGR of 12.8%, with gradual improvements in the country’s economy. This rise in PCADI influenced the overall insurance industry which increased at a CAGR of 12.5% during the review period.

More Studies on Egypt Insurance Markets Include:

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