Egypt - Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), delivered the keynote speech at the sixth annual Insurance and Reinsurance Forum in Sharm El-Sheikh, organized by the Insurance Federation of Egypt, 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.

It took place in the presence of Sherif Farouk, Minister of Supply and Internal Trade, Alaa Al-Zuhairi, Chairperson of the Insurance Federation of Egypt, Nasser Al-Busaidi, Chairperson of the General Arab Insurance Federation, Islam Azzam, Vice Chairperson of FRA, Mohamed Abdel Aziz and Mohamed Sabry, Assistant Chairperson of the Authority, Mohamed Ayyad, Director of the Authority’s Media Center, and a number of the Authority’s leaders.

Farid said that issuing the Unified Insurance Law is a core development in the insurance sector in Egypt this year. It falls within the efforts to improve insurance coverage and represents an important qualitative shift in developing legislation regulating the work of the insurance market. The law assigned the responsibility of drafting executive decisions and regulations to the Board of Directors of FRA, in line with the objectives of development and growth of the sector, while maintaining market stability.

FRA Chairperson added that the issuance of the Unified Insurance Law is a step towards developing, qualifying and issuing policies and procedures to regulate and digitize financial transactions and enhance financial technology.

He explained that the Authority has formed specialized committees and working groups to prepare and draft executive controls and decisions in line with market requirements and sector needs, in parallel with the ongoing approach of conducting an open dialogue with all relevant parties.

He pointed out that the Authority issued Resolution No. (147) of 2024 to continue working on adopting the current regulations until executive decisions are issued in accordance with the new law. This ensures the continuity of regulating the sector in this transitional phase. Furthermore, the Authority’s Board of Directors issued Resolution No. (223) of 2024 regarding the controls to adjust the status of companies operating in the insurance sector in accordance with the Unified Insurance Law. This resolution obligated companies in the insurance sector to adjust their situation before 1 December 2024. The Authority’s Board of Directors Resolution No. (183) of 2024 specified the fiscal year for insurance and reinsurance companies to start from 1 January until the end of December of each year.

The Chairperson of FRA stated that the objectives of the new law involve enhancing insurance to GDP and increasing the beneficiary base through compulsory insurance, newly established insurance pools, agricultural insurance, micro-insurance, and specialized medical insurance.

He pointed out that the legislative and regulatory impact of the law was evident in the strategic partnership between Post for Investment and AXA Egypt to launch the first microinsurance company in Egypt. This reflects the Authority’s commitment to developing and regulating the insurance sector in line with the needs of the targeted groups in society. The shareholders applied for a license at the Authority, attaching a feasibility study for the first microinsurance company.

This was followed by expanding the base of microinsurance distribution entities pursuant to Authority Board of Directors Decision No. (292) of 2023 to include telecommunications companies.

The Authority Chairperson’s Decision No. (80) of 2024 was also issued amending Decision No. 902 of 2016 to raise the maximum amount of microinsurance by 10% to 242,000 instead of 220,000 to keep pace with the rapid economic changes.

It is worth noting that the Authority aims to develop the rules of financial solvency and use the latest methods of determining capital based on risks after approving capital requirements, especially for insurance companies.

The Authority is currently working to complete drafting the rules of governance of insurance companies. These regulate the formation of the boards of directors of insurance companies to diversify expertise in the board.

These rules would also regulate the committees emanating from the board, whether supervisory or executive, such as technology and investment committees. These rules also determine the requirements of supervisory functions and their tasks, as well as setting policies to prevent conflicts of interest and determining the disclosure requirements required from each company.

Work is currently underway to draft other decisions covering establishment and licensing, brokerage activities, insurance funds, capital requirements for insurance companies, reinsurance, specialized medical and micro-insurance, which would achieve a balance between market stability and development. The Authority continues to work through specialized committees to develop draft decisions and implementing regulations.

The Chairperson of FRA said that the Authority is working on developing legislation continuously and believes in the importance of using financial technology and facilitating the application of modern technologies in the sector, and digitization in all insurance procedures. Consequently, it issued the Financial Technology Law 5 of 2022, which allows entities operating in the field of non-banking financial activities to use technology in their activities.

The Authority also completed the legislative framework that began in 2022 by issuing a set of important decisions aimed at enhancing the use of financial technology in non-banking financial activities, namely the Resolution 139 of 2023 regarding the equipment, technological infrastructure, information systems, protection and insurance means necessary for the use of financial technology to practice non-banking financial activities. In addition, there is resolution No. 140 of 2023 regarding digital identity, digital contracts, digital registry, and areas of use of financial technology to practice non-banking financial activities and compliance requirements. It is the first regulatory decision issued by the financial sector regulatory authorities, which specified in detail the requirements for electronic digital identification of customers.

Furthermore, there is also the Resolution 141 of 2023 regarding the outsourcing register in financial technology to practice non-banking financial activities, which are companies that may provide customer identification services and contract records electronically, to financial companies operating in the field.

The Authority also issued Circular No. (3), regarding procedures for enhancing cybersecurity in non-banking financial institutions. This is part of the Authority’s efforts to accelerate the pace of digital transformation to increase levels of financial inclusion while emphasizing the utmost importance of non-banking financial institutions’ commitment to cybersecurity requirements for market stability.

This was followed by the issuance of a set of decisions that contribute to improving regulations and ensuring their efficient implementation, within the framework of enhancing the operational performance of insurance companies and achieving the objectives of sound oversight. The prominent of these decisions is Resolution No. 69 of 2023, which obliges insurance companies to enhance their technological infrastructure to support the electronic linkage project with the FRA.

This decision aims to enable insurance companies to fully automate their activities, allowing the Authority to monitor activities in real-time and develop oversight methods at the sector level. It also contributes to providing accurate statistical data and instant information, which enhances informed decision-making based on reliable information. This eventually helps improve market performance and increase the effectiveness of regulations in various aspects of insurance work.

Farid also pointed out that the Authority signed an agreement with the National Telecom Regulatory Authority to accelerate digitizing non-banking financial transactions, within the framework of efforts to support digital transformation and financial inclusion. An agreement contract regarding the customer data verification service in Egypt was signed, and accordingly, The Resolution 186 of 2024 was issued to obligate insurance companies, companies and entities licensed to practice non-banking financial activities using financial technology.

The Resolution 211 of 2024 was also issued to amend the Authority’s Board of Directors Resolution No. 26 of 2019 regarding the terms and controls for registering companies for electronic collection of insurance policy premiums.

The 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.

The Chairperson of FRA added that the Authority will proceed and complete drawing up the necessary policies to enhance the efficiency and competitiveness of the insurance sector. He explained that the financial statements of insurance companies operating in the Egyptian market reflected a remarkable development in many financial indicators from 30 June 2023, to 31 March 2024. A significant increase was recorded in many key financial indicators, and the net assets of insurance companies amounted to EGP 325.9bn on 31 March 2024, compared to EGP 242.2bn on 30 June 2023, an increase of 34.6%.

He stressed that the insurance sector plays a strong role in enhancing and promoting efforts to increase national savings rates needed for investment. It also contributes greatly to achieving stability and social cohesion by insuring against various future risks, which enhances the flexibility and capabilities of individuals and institutions to confront future risks and deal with them in a way that protects them from fluctuations that make their lives difficult.

The Chairperson of the Authority said that there is no escape from financial technology in enhancing insurance inclusion. As a result, the FRA began developing the policy, procedures and legislative frameworks necessary to digitize financial transactions. This places a big responsibility on the shoulders of bodies operating in the insurance sector to comply with the requirements of stability and sustainability in providing secure services to clients.

Farid also stated that technological development imposes challenges and responsibilities on regulatory bodies to protect the rights of clients.

He explained that the Authority will exert effort to unleash the capabilities of the insurance system throughout the coming period. This can be done through the mechanisms currently available.

Farid also participated with Alaa El-Zuhairy, Chairperson of the Insurance Federation of Egypt, and several leaders in the insurance sector in South Sinai, in an initiative to plant a large number of trees in Sharm El-Sheikh, on the sidelines of the launch of the sixth annual Insurance and Reinsurance Forum, which is organized by the Insurance Federation of Egypt, as a contribution from the conference to reduce carbon emissions from aircraft used to transport conference guests.

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