Egypt: Regulator approves amended rules mandating insurance for microfinance customers
Source: Middle East Insurance Review | Mar 2019
The Financial Regulatory Authority (FRA) has approved amendments to microfinance rules, making it mandatory for microfinance institutions to provide coverage against the risk of death and total disability, through insurers, to borrowers.
The amount of insurance is to be equal to the balance of the micro-loan owed by the client.
The amendment was approved in early February. Dr Mohammed Omran, FRA chairman said the move is part of the regulator’s initiative to extend the social safety net to microfinance clients.
The maximum premium rate based on customer data received from microfinance institutions is estimated at 30 piasters per month per EGP1,000 ($57) of the insured amount, according to an actuarial study prepared by the Authority, he said.
The rules also prohibit a microfinance institution from receiving commissions or introducing fees under any name or by any other means for compulsory insurance coverage other than insurance premiums, according to Dr Omran.
This initiative aims also to resolve the problem of the lack of insurance experience in microfinance institutions by obligating them to contract with insurers. Such insurance follows the model of collective insurance contract proposed by the FRA to cover cases of death and permanent disability. M
EGP1 = $0.06