• Dr. Omran: Policy Holders Protection Fund raises the level of credit rating of the insurance activity in Egypt
• Dr. Omran: The Fund represents a long-awaited step for over 37 years to protect insurance industry from falter risks
Dr. Mohammed Omran, FRA’s Chairman emphasized that Ministerial Decree no. 1581 of 2019 was issued at the end of last week on the formation of the first board of ” Policy Holders Protection Fund “. He noted that this is the final executive action to activate the Fund in order to practice its activity and protect policyholders’ rights in cases of failure of insurance companies or inability to meet their obligations.
He added that the Fund represents a mechanism to improve the performance of insurance industry in Egypt and one of the mechanisms internationally recognized in protecting policyholders’ rights, as it has an effective role in ensuring the stability of the insurance market and increasing the trust of clients in its companies.
Dr. Omran said that this month will witness the first meeting of the Fund’s Board of Directors, composed of clients’ representatives, experts, representatives of life insurance companies and property insurance companies. The priorities of its agenda are to complete the operational requirements by selecting the fund’s headquarters, setting up its organizational structure and drawing up a vision for the fund’s resources from insurance companies’ obligations – whether membership fees or annual contributions – to the fund and setting the policies necessary to manage these financial resources.
FRA’s Chairman noted that with the first meeting of the Board of Directors of the “Policy Holders’ Protection Fund”, a long-awaited step has been achieved for a period of more than 37 years in activating Article 43 of Law on control and supervision of insurance no. 10 of 1981. That Article which necessitated the establishment of such Fund to strengthen insurance industry against risks resulted from the failure of one of its companies to meet its obligations. That is besides; increasing the trust of clients in insurance companies .Thus, positive impact will be witnessed regarding raising the credit rating of insurance industry in Egypt.
In addition, the regulator achieve several key strategic objectives. The Regulator strengthens the legislative framework for activities under FRA’s supervision, including the insurance activity, as well as achieving better management of risks related to the safety and stability of non-banking financial markets as insurance sector is one of the most important means of managing economic and natural risks in order to preserve the productive assets of the national economy.
Dr. Omran added that the Fund is subjected to FRA’s supervision without any interference in its management, which will be carried out by related parties in insurance industry in accordance with the Fund’s statute. On the other hand, FRA has the right to inspect at any time the Fund’s registries, records and documents in order to obtain data and clarifications necessary for supervision and regulatory purposes. In addition, the Fund shall provide the data, information and documents required by the Authority for this purpose and on the dates specified by the Authority. Moreover, FRA shall have the right to conduct a sudden inspection to verify the proper application of the law and issued regulations.
It should be noted that by the end of last year, Ministerial Decree no. 2734 of 2018 on the statute of Policy Holders Protection Fund was issued. The said Fund is aiming at compensating the policyholders of the insurance companies and their beneficiaries in cases arising from their inability to meet its obligations. This shall be applied on claims arising from the date of the Fund’s establishment in an inclusive step to protect insurance activity in Egypt. The Fund’s statute defines the formation of its BOD, stating that it shall include clients’ representatives, experts, representative of life insurance companies and Property insurance companies.