Aggregated News From Investment Management Regulators

FRA finalizes a community dialogue on the comprehensive insurance draft law


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• Maximizing investment returns and diversifying investment channels attracts the attention of funds’ representatives

•  Dr. Omran: We are keen to clarify the philosophy of legislative amendment occurred in the formation of funds’ BOD for further governance

•  Dr. Omran: The amendments represent a shift in managing optional pension schemes by jumping from volunteering to professionalism in performance

Dr. Mohammed Omran – FRA’s Chairman emphasized that discussions with representatives of the largest private insurance funds in Egypt were accounted for maximizing investment returns. The meeting stressed that the philosophy of amendments to the current law is not to rely on investing in short investment channels with fixed returns only, and depriving the investment portfolio of long-term investment channels. Also, the discussions clarify the point of view of the regulator that independent elements with insurance and investment experience shall be included in the BOD formation in order to strengthen governance within pension schemes and enhance levels of transparency and disclosure of private insurance funds.

This came during a session of a community dialogue held at FRA’s headquarters in Smart Village by the end of last week, in the presence of Counselor/ Reda Abd El-Moaty, FRA’s Deputy Chairman and specialists in supervising and regulating private insurance funds sector. The Authority listened to the views of representatives of major funds on the comprehensive insurance draft law after presented to a community dialogue by the end of 2018. The draft includes an amendment to the articles of the Private Insurance Funds Law No. 54 of 1974, which regulates pension schemes for a broad category of labor force in Egypt.  It includes in its membership about 4.8 million members by the end of 2018. They have the rights and obligations of more than 570 funds all over the Republic. Funds own up to 70 billion pounds and capital reserve of nearly 65 billion pounds and pay its members insurance benefits expected to reach 7.5 billion pounds at the end of 2018.
FRA’s Chairman stated that due to the association of various categories of society with the vital role played by the private insurance funds in providing and managing pension schemes, the Authority has been keen to listen to the views of Funds’ managers and their suggestions in the amendments to the proposed law. He added that these amendments stressed on updating the standards and requirements for the formation of private insurance funds’ BOD, pushing it towards professionalism and allowing a relative weight for representation of Board members according to the geographical distribution of the members as much as possible.

Dr. Omran said that the meeting discussed assigning the management of the Fund’s funds to a specialized investment manager, whether natural or legal person according to the size of funds. Also, the meeting discussed the possibility of presenting an investment report to members of the General Assembly to inform them of the essential data related to investment activities. Moreover, the meeting dealt with updating requirements of the validity of insurance Fund’s General Assemblies in order to preserve the rights of minority, ensure that some members do not take more benefits than others and reduce the period of examining the financial status of private insurance funds – actuarially- to three years instead of five years stated in the current law. Meanwhile, FRA will have the right to request this examination at any time before the three years if necessary. Also, FRA will have the right to request amendments to funds’ regulations in the event of surpluses or deficits so as to achieve social justice among members.

It is worth mentioning that one of the most important amendments to the comprehensive insurance draft law is to allow the establishment of private insurance funds in accordance with the three internationally recognized schemes namely, specific benefits, specific subscriptions, mixed benefit scheme that combines the benefits and specific subscriptions. Also, the draft law identifies mechanisms and requirements for transferring from one system to another.

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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