Dr. Mohamed Farid , FRA Chairman:
- The unified insurance law and digitalization efforts aim to enhance insurance penetration while ensuring stability and protecting policyholders
- We are committed to develop policies that will improve the efficiency and competitiveness of the insurance sector, thereby increasing its contribution to the national economy and GDP.
- Insurance plays a crucial role in stimulating national savings which are essential for investment and supporting the successful implementation of economic and social development plans.
- Technological advancements pose challenges and responsibilities for regulators to safeguard consumer rights and ensure the stability and sustainability of the industry
- Proactive regulatory intervention is paramount for protecting policyholders and ensuring a stable and sustainable market. As the industry undergoes digital transformation, institutional development and strong governance are indispensable.
- The Authority is committed to protect policyholder rights as a cornerstone of its vision for insurance inclusion
- The insurance sector holds significant growth potential, but this growth must be balanced with discipline and stability, particularly given the current premium-to-GDP ratio of less than 1%
- We will work to unlock the full potential of the insurance sector.
Dr. Mohamed Farid, FRA Chairman delivered the keynote speech at the 6th 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 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. Islam Azzam, FRA Vice Chairman, Dr. Mohamed Abdel Aziz and Mohamed Sabry, Assistants to FRA Chairman, Mohamed Ayyad, Director of FRA’s Media Center along with several executives from the Authority.
Dr. Farid emphasized the significance of the Unified Insurance Law, highlighting it as a pivotal development in Egypt’s insurance sector this year. This legislation is designed to boost insurance penetration and marks a substantial advancement in regulating the insurance market. The law empowers FRA Board of Directors to draft decrees and executive regulations, enabling the sector to evolve and grow while preserving market stability.
FRA Chairman further explained that the Unified Insurance Law facilitates the development, qualification, and issuance of policies and procedures aimed at regulating and digitizing financial transactions. This will foster the adoption of financial technology, expanding access to insurance coverage for larger beneficiaries. All these efforts will be undertaken while maintaining stability and safeguarding the rights of policyholders.
Dr. Farid clarified that FRA has established specialized committees and working groups to develop and draft the necessary controls and executive decrees. These initiatives are designed to meet the evolving needs of the market and the sector. Additionally, FRA maintains open communication with all relevant stakeholders, actively seeking their input and suggestions. This collaborative approach enhances the developmental impact of the legislation and expedites the implementation of decrees.
He emphasized that the Authority issued Decree No. 147 of 2024 to ensure the continued application of existing regulations until the issuance of executive decrees under the new law, thereby maintaining regulatory oversight during this transitional period. Subsequently, FRA Broad of Directors issued Decree No. 223 of 2024, mandating that all insurance, intermediaries, and reinsurance companies align their status with the Unified Insurance Law by December 1, 2024. Additionally, FRA’s Decree No. 183 of 2024 established a standardized fiscal year for insurance and reinsurance companies, commencing on January 1st and concluding on December 31st of each year.
FRA’s Chairman highlighted that the primary objectives of the new law are to increase the insurance sector’s contribution to the Gross Domestic Product (GDP) and expand insurance coverage through compulsory insurance, newly established insurance pools, agricultural insurance, micro-insurance, and specialized medical insurance.
He noted that the legislative and regulatory impact of the law is evident in the strategic partnership between AXA Egypt and Post for Investment to establish Egypt’s first micro-insurance company. This collaboration underscores the Authority’s commitment to develop and regulate the insurance sector to meet the needs of diverse societal segments. The shareholders have formally submitted a licensing request to the Authority, along with a comprehensive feasibility study for this pioneering micro-insurance company.
The Authority issued Decree No. 292 of 2023 to expand the distribution channels for micro-insurance to include telecommunications companies, alongside existing channels like NGOs , microfinance institutions, Nasser Social Bank -NSB, Egypt Post and commercial banks. This expansion also allows for distribution through natural persons and insurance firms.
Additionally, FRA Chairman issued Decree No. 80 of 2024, amending Decree No. 902 of 2016 to increase the maximum micro-insurance amount by 10% to 242,000 Egyptian pounds, from the previous 220,000 Egyptian pounds, to keep pace with rapid economic changes.
It is worth noting that the Authority aims to develop solvency standards and adopt the latest risk-based capital calculation methodologies, especially following the approval of specific capital requirements for insurance companies.
The Authority is working on developing solvency standards and implementing risk-based capital calculations for insurance companies.
The Authority is currently finalizing governance rules for insurance companies, which will ensure diverse board composition, including insurance expertise, independent members, and women’s representation. These rules will also regulate board committees, such as internal audit, risk, technology, investment committees, and other executive committees. It will set limits on the maximum number of meetings and the allowances paid to members, as well as mandating the disclosure of financial allocations for board members. Additionally, these rules will specify the requirements for oversight roles and their responsibilities, establish policies to prevent conflicts of interest and determine the necessary disclosures for each company.
Concurrently, the Authority is developing regulations for incorporation and licensing, intermediary’s activities, insurance funds, capital requirements, reinsurance, specialized medical insurance, and micro-insurance. This balanced approach aims to ensure both market stability and development. The Authority’s specialized committees continue to work on draft decrees and executive regulations for the sector.
FRA Chairman stated that the Authority is continuously working on developing legislation and believes in the importance of utilizing financial technology and facilitating the application of modern technologies in the sector. Additionally, the Authority has issued Fintech law No. 5 of 2022 that allows entities operating in non-bank financial activities to use technology in their operations.
Furthermore, the Authority has completed the legislative framework initiated in 2022 by issuing a set of important decrees aimed at enhancing the use of financial technology in non-bank financial activities. These include Decree No. 139 of 2023 concerning the equipment, technological infrastructure, information systems and security measures necessary for the use of financial technology in conducting non-bank financial activities. Decree No. 140 of 2023 addresses digital identity, digital contracts, digital records, and the areas of using financial technology in conducting non-bank financial activities, as well as compliance requirements. This is considered the first regulatory decree issued by financial sector regulators that has detailed the requirements of eKYC (electronic Know Your Customer).
In addition, Decree No. 141 of 2023 introduces the Outsourcing Registry, a mandatory registration for outsourcing service providers engaging in fintech activities. This registry includes companies that are allowed to provide eKYC (electronic Know Your Customer) services and electronic contract records to financial companies operating in the field.
The Authority issued Circular No. 3 regarding procedures to enhance cybersecurity in non-banking financial institutions. This is part of the Authority’s efforts to accelerate digital transformation and increase financial inclusion, while emphasizing the utmost importance of non-bank financial institutions adhering to cybersecurity requirements to ensure market stability and protect customers.
Subsequently, a series of decrees were issued to improve regulations and ensure their efficient implementation. These decrees aimed at enhancing the operational performance of insurance companies and achieving sound oversight objectives. One of the most significant decrees is No. 69 of 2023, which requires insurance companies to upgrade their technological infrastructure to enable seamless electronic integration with the Authority.
This decree aims to fully automate insurance company operations, enabling the Authority to conduct real-time monitoring and develop comprehensive supervisory frameworks. By facilitating the provision of accurate and timely statistical data, this initiative supports informed decision-making, improves market performance, and enhances the effectiveness of regulations across the insurance industry.
Dr. Farid pointed out that the Authority has signed an agreement with the National Telecommunications Regulatory Authority (NTRA) to accelerate the digitization of non-bank financial transactions. This is part of the efforts to support digital transformation and financial inclusion. An agreement was signed to facilitate customer data verification in Egypt. Subsequently, Decree No. 186 of 2024 was issued, obliging Fintech companies and insurance companies to verify customers’ ownership of the mobile phone through the National Telecommunications Regulatory Authority (NTRA).
The Authority also issued Decree No. 211 of 2024, to amend decree No. 26 of 2019 regarding the terms and controls for registering electronic payment service providers.
FRA also witnessed the launch of the first strategic partnership between the insurance and telecommunications sectors, represented by Misr Life Insurance and e& Egypt. This partnership aims to market and distribute insurance products through e& Egypt branches, as part of the Authority’s efforts to expand the base of beneficiaries of insurance coverage and boost insurance inclusion.
FRA Chairman added that the Authority will continue to develop policies to enhance the efficiency and competitiveness of the insurance sector. He highlighted the significant improvement in the financial performance of insurance companies operating in Egypt from June 30, 2023, to March 31, 2024. Net assets of insurance companies increased by 34.6% to EGP 325.9 billion on March 31, 2024, compared to EGP 242.2 billion on June 30, 2023.
He stressed on insurance sector’s crucial role in boosting national savings rates essential for investment. It significantly contributes to stability and social cohesion by mitigating future risks. This enhances the resilience of individuals and institutions, enabling them to better navigate uncertainties and protect themselves from adverse events.
FRA Chairman emphasized the inevitable role of financial technology in enhancing insurance inclusion. To facilitate this, FRA has initiated the development of necessary policies, procedures, and legislative frameworks to digitize financial transactions. This places a significant responsibility on insurance sector entities to ensure the stability and sustainability of their operations while providing secure services to clients.
Dr. Farid highlighted the challenges and responsibilities posed by technological advancements for regulatory authorities in safeguarding consumer rights and ensuring industry stability and sustainability. He emphasized that financial technology is crucial for achieving greater financial inclusion, stating that without technology, efforts to expand insurance coverage would be hindered.
Dr. Farid stressed on the importance of early and proactive regulatory intervention to protect policyholder rights and ensure market stability. He highlighted the role of strong institutional development and governance in navigating the challenges posed by rapid digital transformation.
He emphasized the importance of protecting policyholder rights as a cornerstone of the Authority’s vision for achieving insurance inclusion.
He highlighted the significant growth potential of the insurance sector, but stressed the need for disciplined and stable growth. Dr. Farid added that with a low premium-to-GDP ratio of less than 1%, new approaches are needed to enhance the sector’s efficiency and competitiveness to boost its contribution to the national economy.
Additionally, he emphasized the need to develop and enhance the efficiency and competitiveness of the insurance sector to strengthen its role in supporting the Egyptian economy and achieving sustainable growth. This is especially important in light of rapid technological advancements and evolving regulatory requirements.
He explained that the Authority works to unleash the potential and capabilities of the insurance sector in the coming period through the available mechanisms to achieve the desired goals and increase insurance coverage and the number of beneficiaries to include all segments of society.
Dr. Farid, along with Alaa El-Zoheiry, Chairman of Insurance Federation of Egypt and other insurance industry leaders, participated in a tree-planting initiative in Sharm El-Sheikh to reduce carbon emissions resulted from the use of aircrafts to transport guests of the conference.
Last modified: November 12, 2024