Life insurance unacceptable

Yomna Kamel Middle East Times staff
 
AN OVERWHELMING NUMBER OF EGYPTIANS GO TO THE GRAVE WITHOUT LIFE INSURANCE
 Despite the number of societies that encourage life insurance as a wise move, the concept is frowned upon in Egypt, many people seeing it as going against their religious and traditional beliefs.

Although insurance is not a new business in Egypt, there are only 10 companies operating in the field, a number that reflects the low demand for this industry.

Some insurance experts think that Egyptians do not like the idea of life insurance simply because they are not aware of its benefits and policies.

"It was not until the 1980s that Egyptians started to know something about life insurance, but still the prevalence of some social and religious beliefs along with a lack of awareness explain their reluctance to go for it," says Khaled Zaher, a marketing representative at Misr Insurance.

Company representatives like Zaher are trying hard to explain to people how life insurance can help them and their loved ones.

"We strive to convince people to go for life insurance. Most customers are not aware of its benefits. First, we have to explain what life insurance is and the different policies we provide and then try to convince them to go for it," he says.

Institutional Investor on-line magazine reported in 1998 that Egypt's insurance industry has been burdened by widespread public ignorance of the benefits of private insurance.

Life insurance premiums were an insignificant 0.2 percent of Gross Domestic Product (GDP) in 1995, compared to a world average of 6 percent, according to a World Bank economic memorandum, the magazine stated.

Unfortunately, Zaher thinks that very few people are convinced by life insurance even after they become fully aware of idea. They are willing to get their cars and property insured, but not their lives, since other religious, social and economic considerations control their thoughts.

"Clients usually say it is haram [forbidden by religion], but we don't understand what makes it haram. By getting life insurance, we do not intervene in God's will, but provide financial support to the deceased's family. Sometimes I feel they say it is haram just to end the discussion," he says.

Zaher thinks life insurance does not differ a lot from the Bayt Al Maal, an Islamic Fund (founded in the early years of Islam) where the zakat (a percentage of Muslims' annual income) and sadaqa (donations) were developed to help people in need.

The lack of a clear Islamic stance supporting or rejecting life insurance confuses people and makes them more reluctant to have their lives insured.

"Life insurance is still a controversial issue even among members of the Azhar fatwa (religious opinions) Committee. A group of them, headed by the Sheikh of Al Azhar, thinks it is not against Islam, because they build their fatwa on the Islamic principle of takaful (social support) where Muslims should help each other in times of crisis," says a sheikh on the fatwa Committee at Al Azhar, who requested that his name be withheld.

Other Muslim scholars, like Suaad Saleh, professor of jurisprudence at Al Azhar University, prefer what they call "Cooperative Insurance," where a group of people donates a sum of money and place it in a fund that will be given to people in need in case of death.

"There are two reasons that make some Muslim scholars consider life insurance against the tenets of Islam," she says. "First, it seems like gambling since it connects the payment with the occurrence of a future accident. Second, the fixed interest it pays to life insurance holders is not accepted in Islam."

Saleh says that it has to be variable interest to avoid being a form of reba (lending a sum of money and earning money when it is returned) which is clearly prohibited in Islam.

"For scholars who don't say life insurance is haram, they consider it a legal contract between two parties: the insurance company and the life insurance holder and as long as both parties are satisfied, it is fine," she says.

Such controversial Islamic views towards life insurance are not the only reason hindering its acceptance in Egypt.

Zaher says that some families do not like the idea of life insurance because they consider it a bad omen. They relate it to losing someone close to them even if this is not logical because death has nothing to do with life insurance.

Such ideas about life insurance are common among middle-class families who prefer to give these kinds of excuses to keep insurance salesmen away from their homes. However, the monthly installment that goes with the insurance is seen by insurance experts as the main reason why Egyptians don't buy it.

"Most life insurance clients are either businessmen who can afford to pay the installment or vendors who pay a smaller installment, and don't expect as large a return as businessmen for example," says Zaher. "For middle-class families whose monthly income does not exceed a few hundred pounds, a E£200 monthly installment is impossible."

According to Zaher, the only solution to encourage more people to go for life insurance is to make them aware of the benefits and dedicate part of the insurance industry's budget for media campaigns.

"If the number of life insurance holders increases, insurance companies might be able to reduce installments and make them more affordable to different social classes," Zaher says.