The Financial Regulatory Authority (FRA) is proposing to increase the minimum capital of life and non-life insurers to EGP150m ($8.4m) from the existing EGP60m, according to a draft of the new comprehensive insurance law.
The EGP150m figure is higher than the EGP100m minimum capital that had previously received a lot of mention.
In addition, under the proposed new law, if a P&C insurer wishes to offer oil and aviation insurance, its paid-up capital must not be less than EGP300m. Reinsurance companies are to have a minimum capital of EGP500m.
The proposed new law includes, for the first time, the regulation of takaful, compulsory motor insurance and the establishment of a specialised insurance pool for this purpose, and the entry of standalone health insurance companies.
The draft insurance Bill is circulated to obtain feedback before the preparation of the final draft which will be sent to relevant parties including the Council of Ministers. The finalised Bill is set to be presented to the House of Representatives at the end of this year.
Insurers are scheduled to meet in late January to present and discuss their comments after studying the draft. Prior to this, the FRA’s Insurance Advisory Committee had discussed the draft law with entities in Egypt’s insurance industry, namely, the IFE, private insurance funds and legal persons representing professions associated with the insurance industry.
Provisions
The draft Bill consists of 228 articles, which are divided into 10 sections with several chapters. The first section provides the general definitions related to insurance and reinsurance, the form of takaful, microinsurance, the formation of funds, the definition of excess subscription in takaful and cumulative voting, and other general concepts and terms.
The second part of the draft law consists of four chapters, the first chapter of which deals with the procedures related to the establishment of companies, licences and transfer of ownership.
Among the provisions is a clause stating that no natural or legal person and its related parties may own more than 10% of the issued capital of the insurance company or the voting rights of any company. The holding of any percentage leading to effective control of the insurer shall be allowed only after obtaining the approval of the board of the Authority.
The draft comprehensive insurance law provides for the registration of licensed insurers and their geographical branches, marketing outlets and distribution of their policies in a special register prepared for this purpose by the FRA, after paying a fee of EGP50,000 for the headquarters, EGP25,000 for each branch and EGP10,000 for each marketing outlet, provided that the approval of the head of the Authority is obtained before the start of the establishment of each branch or outlet. M
EGP1 = $0.06