8. IJBGM - Restructuring the Public Insurance Sector in Egypt - Alia Abdel - PAID

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RESTRUCTURING THE PUBLIC INSURANCE SECTOR IN EGYPT- WAS IT

INSIGHTFUL??

ALIA ABDEL HAMID AAREF1 & GMAL SROUR SALEM2

1Associate Professor, Faculty of Economics and Political Science, Cairo University, Egypt

2Chief Executive of nvestment, !isr "ife nsurance, Cairo, Egypt

ABSTRACT

The public insurance sector in Egypt has been restructured during the period 2006-2010,

as an endeavor to enhance its efciency. Restructuring aimed at epanding the insurance sector

share in the development process, enhancing its competitive advantage, providing ne! insuranceservices, improving its "nancial status, and "nally maimi#ing the use o$ its human resources.

%ost importantly the main ob&ective o$ the restructuring program !as to eliminate unhealthy

competition bet!een public insurance companies that resulted in diminishing mar'et share ratios.

The study to assess the value o$ the restructuring process depended on a purposive

sample in selected head(uarters to investigate managers and !or'ers) perceptions regarding* the

attainability o$ goals and &usti"ability o$ the merger process, comprehensiveness and

sta'eholders) participation, inputs sufciency and human resources) satis$action, and relevance o$

+rogram methodology

The assessment revealed that the program had minimal impact on service provision

(uality, time and accuracy. %oreover, the decision to eliminate the activities o$ the Egyptian

ompany $or Re-insurance, proved its $allacy, as it resulted in out-o$- economy capital drainage,

especially $rom $oreign echanges. inancially ho!ever, the study revealed // increase in the

capital value o$ afliated companies a$ter the program, !hich enabled to aord higher values o$

ris'.

The study recommended developing ne! in$ormation system to $acilitate providing

insurance services accurately and efciently, and enabling customers to electronically pay theirinstallments via credit cards. +roviding proper training !as moreover, a necessity to enhance

!or'ers) 'no!ledge and s'ills. The study also recommended incorporating all sta'eholders in

improvement strategies in order to enhance the acceptance o$ any ne! program and minimi#e

possible resistance.

KEYWORDS# Administrative $eform, Egypt, nsurance Sector, !erger, $estructuring

INTRODUCTION

%he pu&lic insurance sector in Egypt has &een restructured during the period 2''()2'1', as an endeavor to

enhance its efficiency* $estructuring aimed at expanding the insurance sector share in the development process, enhancing

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achieve those goals :Authenticity Consulting, 2''(?* 8o+ever, restructuring is most li.ely to happen +henever companies

are &attling and ta.ing a loss* A %hird)party is going to &e introduced directly into assess the +ay in +hich the company

has &een run, and then suggest recommendations according to the things they found that can help result in the &usiness run

more effectively :Flexi&le $esources, 2'12?*

5hatever restructuring is considered remedial or developmental, it is crucial, li.e any other reform policy, to

assess its outcomes* Program assessment helps in# affecting the formulation of pu&lic policies, improving resources

allocation, energiing o&-ective oriented and achievement focused culture +ithin organiations, improving output delivery

mechanisms, and chec.ing on customers4 satisfaction :5orld /an., 1==?* !oreover, program assessment may &e

considered as a tool to+ards enhancing the comprehension and agreement around program o&-ectives and effectiveness

:El)S+a, 2''?* Participatory monitoring and evaluation is of great importance in the assessment process, as it empo+ers

all sta.eholders to feel their o+nership to the programs applied, in addition to deeply rooting transparency and

accounta&ility values :5orld /an., 2'1'a?* %he assessment applied in this paper fits someho+ to such @participatory

assessment, especially in its ualitative part, as it see.s to explore the value of restructuring the pu&lic insurance sector

program through investigating +or.force4s perceptions to+ards its effectiveness utiliing multiple criteria represented in#

goals attaina&ility and -ustifia&ility of the merger process, comprehensiveness and sta.eholders4 participation, inputs

sufficiency and human resources4 satisfaction, and finally relevance of Program methodology*

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@completely disagree*

RESULTS

%he uestionnaires investigated the samples4 attitude against the four main criteria mentioned a&ove* Follo+ing isthe analysis of the results gained*

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A##i)>i*i# G*! )% +$!#ii>i*i# #=" M"'"' P'i*i# G*!

3uestions addressed the individuals4 opinion concerning three main facets* %a&le :1? sho+s these facets and the

average and standard deviation of ans+ers collected*

T>*" 1 P'' G*!

$"!#i) A"'" S#.

6oals Clarity and decisiveness G*1> 1*2G(

Availa&ility of measura&le o&-ectives 2*=G 1*1J'

6oals appropriateness G*1J 1*2G

$esponses +ere inclined to sho+ @neutral opinion, as the average +as around G0 i*e*, participants +ere not fully

a+are of the program o&-ectives and criteria, +ith high consensus level :st* K)N 1?*

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averages of opinions expressed +ere for the second alternative in the scale0 i*e*, @Agree, indicating thus that the program

got the reuired support and en-oyed the reuired commitment from &oth administrators and +or.ers* Also he ans+ers

+itnessed lo+ degree of diffusion that ranged from 1*'GJ)1*1(2* %he results are represented in %a&le :>?*

T>*" 7 T=" D"'"" P'' S$@@'# )% Ci#")#

T=" P'' R"1 1*2'J

Bo+nsied the human Capital G*2 1*1J=Applied ne+ human resource policies 2*=' 1*2(1

$aised $esistance to Change 2*J1 1*G'=

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T=" P'' A"'" S#.

Bepended on %ransformational %raining

Program for +or.ersG*1 1*'J2

Beveloped +or.force s.ills 2*>( 2*>(

mproved +ages and salaries 2*G 1*GJ1

Achieved Hustice among 5or.force 2*' 1*G2J

Provided ne+ accounta&ility measures G*'2 1*12=

Eliminated Corruption G*'' 1*'J2

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5as applied according to specific timeframe 2*J( '*=(=

8old sessions and +or.shops to enhance +or.ers4

a+areness a&out its o&-ectives and reasonsG*2' 1*1>

Applied concurrent evaluation G*'' 1*'J2

8ad the full authority to get implemented 2*(1 1*'J'

Ensured proper coordination &et+een different authorities G*'J 1*1

Ensured clarity of missions and tas.s 2*G 1*1'J

Ensured clarity of line of authorities 2* 1*'>GBelegated enough authority to line staff G*2 1*21

Provided e)&rochures for different insurance documents 2*=> 1*'J1

Ensuring transparent mechanisms in appointing and

selecting promoting +or.ersG*'J 1*2GG

Ena&led electronic interaction +ith customers G*2J 1*'=

$espondents perceived that the program +as properly administered, as it depended on &ringing in successful

&enchmar.s, +as carried out according to definite timeframe and sufficient coordination among different authorities* %hese

results +ere exhi&ited +ith standard deviation ta.ing a value around 1*

As for the conseuences, the respondents sho+ed neutral perception concerning the duplication of tas.s

elimination and the clarity of lines of authority, +ith lo+ value of standard deviation*

Becentraliation of authority +as another conseuence assessed* %he program as apparent from the ta&le did not

maintain the &alance &et+een responsi&ilities and delegated authorities to first line managers, +ith an average less than G0

&ut +ith high degree of dispersion over 1*2*

!oreover, transparency +as not evidenced &et+een program administrators and +or.ers, +ith averages more than

G referring to @disagree alternative, and high degree of consensus:St* around 1?* !echanisms in appointing, selecting and

promoting +or.ers +ere not clear, +or.ers +ere not allo+ed to get engaged in the program &efore getting started, and

finally an electronic index of insurance certificates +as not properly provided to +or.ers*

n nutshell, the performance of the nsurance sector did not +itness ma-or improvements* %his could &e attri&uted

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Eliminating competition among pu&lic insurance companies,

Enhancing +ages and salaries,

Segregating life insurance from real estate insurance, as each has its uniue tools and mechanisms,

ncreasing the capital value of affiliated companies,

Esta&lishing the &iggest insurance entities in the area of real estate and life insurance, due to the merger and

acuisition processes too. place in the restructuring program*

Providing ne+ insurance services0 such as complementary insurance certificates, and

Adopting ne+ promotion policy and focusing on improving human resources capa&ilities*

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REFERENCES

1* Aaref, Alia :2'1>?* A%i)i!#'#i" R"'- T="'"#i*i< A%i)i!#'#i)- S#'#"i< R"' i) #=" A'> W'*% F=1>>I

J* ;e+mann, Fred !*0 5ehlage :1==>?, Successful School $estructuring, A $eport to the Pu&lic and Educators &y

the Center on rganiation and $estructuring of Schools*

* &olens.y, ;ic. :1==?* P'


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n your pinionD*

• 5hat +ere the main results attained through the program7

• 5hat +ere the ma-or disadvantages ta.ing place after Program mplementation7

• 5hat are the suggestions should &e considered if +e +ant to further improve the sector performance7

I@

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8. IJBGM - Restructuring the Public Insurance Sector in Egypt - Alia Abdel - PAID