الهيئة العامة للرقابة المالية

Dr. Islam Azzam – FRA Vice Chairman:

• The new law is crucial for enhancing stability and inclusion within the insurance sector. It also contributes to improve governance standards and safeguard policyholders’ rights.
• Ongoing community dialogue with all relevant parties to develop and implement effective strategies that will optimize the law’s positive impact on the market.

Dr. Islam Azzam, FRA Vice Chairman outlines the framework of the Unified Insurance Law at the 6^th Sharm Rendezvous 2024 hosted by the Insurance Federation of Egypt “IFE”, under the title “A Future Vision for Developing the Insurance Industry”. The conference aims to discuss the latest developments in the insurance industry and enhance cooperation between various parties in the sector.

The event was attended by key figures, including Dr. Mohamed Farid, FRA Chairman, Dr. Sherif Farouk, Minister of Supply and Internal Trade, Alaa El-Zoheiry, Chairman of Insurance Federation of Egypt, Nasser Al-Busaidi, President of the General Arab Insurance Federation (GAIF), Dr. Mohamed Abdel Aziz and Mohamed Sabry, Assistants to FRA Chairman, Mohamed Ayyad, Director of FRA’s Media Center along with several leaders form insurance sector.

Dr. Azzam emphasized the significance of the Unified Insurance Law as the most substantial development in Egypt’s insurance sector this year. Implemented in July, the law represents a major step forward in regulating the insurance market.

He explained that FRA’s board has been entrusted with drafting the necessary executive decrees and regulations to facilitate sector growth while maintaining market stability.

Dr. Azzam further highlighted the law’s focus on enhancing financial stability for all insurance entities and promoting insurance inclusion through accelerated digital transformation. He added that FRA is committed to develop the insurance sector, expand access to insurance services, improve governance and protect policyholders’ rights.

To achieve these goals, FRA has established specialized committees and working groups to develop and draft executive controls and decisions that align with market needs. FRA also maintains open communication with all stakeholders to ensure the law’s positive impact and facilitate the implementation of decrees, aiming to foster the growth of non-bank financial markets and safeguard the rights of all consumers.

He added that as a result of FRA’s communication with all parties in the Egyptian insurance market and receiving requests from numerous companies, it became apparent that there were some issues arising from the discrepancy between the fiscal years of Egyptian companies and foreign companies. All Egyptian companies deal with foreign reinsurance companies that prepare their financial statements for a fiscal year ending on December 31^st  of each year. The difference in the fiscal year between Egyptian and foreign companies leads to discrepancies and overlaps in their financial years. Therefore, FRA issued a decree specifying the beginning and end dates of the fiscal year for insurance and reinsurance companies, setting the fiscal year for insurance and reinsurance companies from January 1^st  to December 31^st  of each year, effective from the fiscal year beginning on January 1, 2025.

He pointed out that the law aims to enhance the insurance sector’s contribution to the gross domestic product and increase the beneficiary base through mandatory insurance. The new law introduced several mandatory insurances and granted FRA’s board the authority to propose a set of mandatory insurances suitable for the Egyptian market based on specialized technical studies, subject to a decree by the Council of Ministers. The law has specified types of coverage such as government asset insurance, divorce risk insurance, cyber risk insurance, and certain professional liability policies. These mandatory insurances are currently under study to be implemented gradually in the future in a manner that serves all concerned parties.

He also mentioned that the law enables insurance companies to participate in Catastrophe risk pools and empowers FRA’s board to propose additional pools based on specific studies.

He added that the Unified Insurance Law has introduced the possibility of establishing micro-insurance companies, accelerating insurance inclusion and providing social protection for vulnerable groups. These companies can offer both personal and property insurance products with lower capital requirements due to the low-value risks.

Dr. Azzam noted that the Unified Insurance Law regulates the specialized medical insurance business, including both short-term and long-term coverage. This requires health maintenance organizations (HMOs) to comply with insurance regulations and come under FRA’s supervision. This is expected to lead to increased insurance premiums.

The new law also specified the capital requirements for entities operating in the insurance business and granted FRA’s board the authority to determine minimum capital requirements for each activity.

The Unified Insurance Law outlines the minimum capital requirements for entities involved in insurance activities, such as insurance brokerage firms, expertise firms (survey, consultancy, actuarial) and Health Maintenance Organizations (HMOs). The law empowers FRA’s board of directors to determine the minimum capital requirements for each activity based on its specific technical, financial, and technological needs.

The Authority is currently finalizing governance rules for insurance companies. These rules will ensure board diversity, including insurance expertise and independent members. They will also regulate board committees and their activities, setting limits on meetings and allowances. Additionally, the rules will address conflict of interest and disclosure requirements.

FRA Chairman delivered the keynote speech at the 6^th  Sharm Rendezvous 2024, as being the regulator for insurance, capital markets and non-banking financial activities. Dr. Farid participated in tree-planting initiative by the Insurance Federation of Egypt which aimed at reducing carbon emissions from flights transporting conference guests. This initiative aligns with FRA’s commitment to promote sustainable development and preserve a sustainable planet for future generations.