Islam Azam, Vice President of the Financial Regulatory Authority (FRA), discussed the Unified Insurance Law, its philosophy, and its objectives during his participation in the Egyptian Insurance Federation's annual Insurance and Reinsurance forum. Azam stated that the Unified Insurance Law is one of the most significant developments in Egypt's insurance sector this year, particularly since its implementation in July. He explained that it represents an important milestone in developing regulations governing the insurance market. He added that the FRA has delegated the responsibility of formulating decisions and executive regulations to its board of directors to align with the sector's goals for growth and stability. Azam noted that the law's philosophy and objectives focus on enhancing financial stability across all entities involved in insurance activities and supporting efforts to achieve insurance inclusion through accelerating digital transformation. The FRA places significant importance on the development and expansion of the insurance sector to increase the base of beneficiaries, improve governance, and protect policyholders' rights. He explained that the FRA has established specialized committees and working groups to draft regulations and decisions tailored to the needs and requirements of the market. This is done alongside ongoing open dialogue with all stakeholders to gather feedback and suggestions to enhance the legislative impact and facilitate the swift enforcement of decisions, aiming to develop non-bank financial markets and protect the rights of all participants. Azam further explained that due to the FRA's engagement with various parties in the Egyptian insurance market, challenges arose from the differing fiscal years of Egyptian and foreign companies. Egyptian companies primarily deal with foreign reinsurers who prepare their financial statements based on a fiscal year that ends in December, while Egyptian firms operate on a different fiscal year. To address this, the FRA issued a decision to align the fiscal year for insurance and reinsurance companies, setting it from 1 January to 31 December, starting from the fiscal year beginning on 1 January 2025. He highlighted that the law aims to increase the insurance sector's contribution to the GDP and broaden the base of beneficiaries through mandatory insurance products. The new law introduced various mandatory insurance schemes and empowered the FRA's board to propose new compulsory insurance types suitable for the Egyptian market based on specialized studies. The government will issue decisions regarding these schemes, including insurance for government assets, insurance against divorce risks, cyber risks, and some professional liability policies. Currently, these mandatory insurance types are under study for gradual implementation in the future to benefit all concerned parties. The law also allows insurance companies to participate in establishing a natural risks pool and grants the FRA board the authority to propose the creation of additional pools based on specific studies. Azam explained that the Unified Insurance Law also introduced the possibility of establishing microinsurance companies to accelerate the pace of achieving insurance inclusion and providing social protection to the most vulnerable groups, allowing them to offer both personal and property insurance. He mentioned that this move aims to expand insurance coverage for wide societal segments interested in microinsurance, with lower capital requirements than traditional companies due to the smaller scale of insured risks. He pointed out that the law also targets the regulation of specialized medical insurance, both short-term and long-term, requiring specialized medical insurance companies to formalize their status under the insurance law and FRA supervision. This is expected to increase the premiums in the medical insurance sector. The law further defines the capital requirements for insurance-related entities and grants the FRA board the authority to set minimum capital thresholds for each sector. Azam added that the law specifies the capital requirements for entities connected to the insurance sector, such as insurance brokers, actuarial, consulting, and survey companies, as well as medical care companies managing healthcare networks. The FRA board is empowered to set minimum capital levels for each activity based on its specific technical, financial, and technological needs. Lastly, Azam mentioned that the FRA is currently finalizing the corporate governance rules for insurance companies, which will regulate the formation of insurance company boards to ensure diversity in expertise, particularly in insurance, with independent members and female representation. These rules will also regulate board committees, such as audit and risk committees, and important executive committees, including those for technology and investment. It will also define maximum meeting frequencies, allowances, and disclosure of financial provisions for board members, along with the regulatory roles, policies to prevent conflicts of interest, and required disclosures from each company.
