الهيئة العامة للرقابة المالية

• The deadline to submit remediation plans for policyholder obligations is reduced from 6 months to 3 months.
• Deficit remediation now starts at the financial statement date instead of FRA notification date.

Financial Regulatory Authority (FRA), chaired by Dr. Mohamed Farid, has issued new amendments to the investment regulations governing the “Allocated Funds” of insurance and reinsurance companies. The primary goal of this update is to significantly bolster the protection of policyholders’ and beneficiaries’ rights.

FRA resolution No. 3 of 2026 stipulates that if a company’s Allocated Funds – mandatory reserves held specifically to pay out insurance claims – are found insufficient to cover its obligations, the company must immediately fill the gap using its Free Funds. If a company’s Free Funds cannot cover the shortfall, it is granted a 3-month grace period to resolve the deficit. This is a major shift from the previous regulation, which offered a 6-month window.

Allocated Funds are the compulsory reserves an insurer must hold to guarantee it can fulfill its immediate commitments to its policyholders.

FRA has eliminated regulatory delays by shifting to an automatic deficit-remediation trigger based on financial reporting dates. By halving the compliance window to three months and requiring immediate recovery plans, the Authority is accelerating intervention to safeguard policyholder interests.

Free Funds are defined as non-allocated resources not designated for direct policyholder obligations. They represent a company’s safety margin and additional financial capacity, typically consisting of equity, retained earnings, or general reserves.

Insurance companies have fully complied with FRA’s December 2024 resolution regarding minimum capital requirements. By raising the floor to EGP 600 million per company, the sector witnessed a total capital injection of approximately EGP 10 billion.

Additionally, FRA mandated that insurance and reinsurance companies shall invest between 2.5% and 20% of their paid-up capital in open-ended funds targeting listed equities. The sector successfully met these mandates by allocating a further EGP 2.6 billion toward open-ended funds throughout 2025.