• Dr. Omran: In the first precedent of its kind, insurance companies, private insurance fund and insurance pool set a unified insurance legislation. FRA supervises and regulates them to restore the leadership of the Egyptian insurance industry in the region.
• Dr. Omran: The final draft of the unified insurance bill will be presented to FRA’s BOD at its next meeting and be submitted to the Cabinet of Ministers
Dr. Mohammed Omran – FRA’s Chairman announces that the final draft of the unified insurance bill has been finalized. He adds that it is ready to be presented to FRA’s BOD at its next meeting to approve provisions of the draft law to be submitted to the official authorities concerned with the issuance of the law.
FRA’s Chairman said that the draft law included ten chapters and 233 articles ( some amended and other newly introduced). He added that the draft law was prepared by many experts and specialists in all areas of insurance and reinsurance and related activities and services. The provisions of the Law took into account the community dialogue which was conducted in three stages and absorbed all the visions and aspirations of the industry in the draft law, which was then thoroughly revised by FRA experts.
FRA’s Chairman emphasized that upon the preparation of the bill, FRA took in consideration the problems and difficulties that exist from the practical application of the existing Law. Also, FRA took into account changes in the market affecting the four legislations that govern the insurance activity within the Egyptian State, namely, provisions regulating the insurance policy in force since 1948, provisions governing private insurance funds in force since 1975 , provisions of Law on Insurance Supervision and Control which have been in force since 1981 and finally compulsory motor third party liability which relate to a large number of citizens.
In addition, FRA’s Chairman pointed out that the proposed new law will move the insurance industry to risk-based supervision and set solvency standards in line with international norms. That is besides granting FRA the authority to determine types of mandatory and compulsory insurance for both entities and individuals.
Dr. Omran explains that the draft law includes a specialized regulation for the first time for both Takaful insurance and micro insurance, which concerned with marginalized groups through facilitating their access to insurance service. In addition, the draft law regulates Medical Management Services, promotes agricultural insurance and urges expansion in subscription. Also, it formulates a regulatory philosophy based on subjecting the activities related to the insurance activity to FRA’s rules of incorporation and licensing. Besides, the draft law grants FRA the authority to establish insurance facilities in addition to its main job of issuing practice permits in order to achieve some degree of facilitation and speed in providing services offered by the Authority. Moreover, the draft law allows the regulator to develop standards and regulations for establishing and licensing insurance companies and to develop the existing management criteria to comply with international standards in the field of corporate governance, that is besides updating controls on acquisition and merger.
Dr. Omran emphasizes that mechanisms of electronic supervision are also included as part a digital transformation plan. Also, the draft covers corporate governance, including the requirement for FRA to review the list of candidates for membership and chairmanship of the boards of insurance companies before being presented to the general assemblies in order to ensure that the insurance company operates in a stable and sound manner, just like in banking financial sector. That is besides Ensuring that prompt and effective dispute resolution mechanisms are in place to resolve disputes and grievances, while reconsidering provisions of penalties using a deterrent and smart approach at the same time.
Dr. Omran notes that the latest version of the draft law responds to representatives of the insurance industry in several points. This includes referring ratios and controls of maximum limits of investment channels which formed companies’ investment policy to FRA’s BOD so as to achieve flexibility in performance and maximize returns of company’s investment policy.
In a related context, Counselor Reda Abdel Moaty – FRA’s Vice Chairman emphasizes that amendments to private insurance funds – stated in the new draft law – has been keen to develop voluntary insurance system represented by private insurance funds. The new draft law develops mechanisms of forming private insurance funds’ BOD, how to hold general assemblies and how to manage it in order to enhance transparency and disclosure and applying good management rules.
Moreover, the new draft law allows the establishment of special funds in accordance with the three globally known systems, namely defined benefits, defined contributions and a hybrid system. In addition to setting quick and effective mechanisms to settle the complaints and disputes of funds’ members, while allowing the establishment of private insurance fund’s federation and using digital transformation mechanisms.
Counselor Reda Abdel Moaty adds that the draft law addresses the problems that resulted from the practical application of Law no 72of 2007 promulgating the law on compulsory insurance against the civil liability arising from high speed transportation motor vehicle and its executive regulations. He notes that the said law aims at achieving a degree of social responsibility for the insurance industry by providing protection mechanisms for those affected by accidents of rapid transport vehicles. On the other hand, the draft law keeps abreast of the changes that occurred upon applying this type of compulsory insurance and resulted in the establishment of a specialized insurance pool last February. Then, followed by introducing digital transformation mechanism and increasing the amounts of insurance paid through this insurance pool in a manner that helps to take care of the target groups in a decent manner in light of the current economic changes.
It is worth mentioning that the fourth axis of FRA’s comprehensive strategy for developing non-banking financial activities sector 2018-2022 aims at developing the legislative structure governing non-banking financial activities. In addition, in its seventh axis, the strategy aims at developing the markets and services to push the contribution of the insurance sector to the GDP to exceed 1% during the four years of implementing the strategy. Besides, doubling insurance premiums to reach 50 billion EGP in 2022 compared to 24 billion EGP in 2017, and increasing the net investments of insurance companies to 150 billion EGP in 2022 compared to 86 billion EGP during 2017. Also, according to FRA’s comprehensive strategy, the size of private insurance funds shall reach 100 billion EGP by the end of the strategy’s timeframe.