The Financial Regulatory Authority (FRA) is proposing to increase the minimum capital of life and non-life insurers to EGP150m (US$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 of the new insurance law was released by the Financial Regulatory Authority (FRA) to the Insurance Federation of Egypt (IFE). The FRA will also be sending the relevant text of the proposed new law related to insurance brokers and private insurance funds to the Egyptian Insurance Brokers' Association and brokerage companies and to private insurance fund managers, reported Al Mal News citing a senior FRA official.
The draft insurance Bill is circulated so as to obtain feedback before the preparation of the final draft which will be sent to 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.
Insurance companies are currently studying the draft. They are scheduled to meet later this month to present and discuss their comments. Meanwhile, the FRA's Insurance Advisory Committee is preparing to discuss the draft law with entities operating in the Egyptian insurance industry, namely, the IFE, private insurance funds and legal persons representing professions associated with the insurance industry.
The draft Bill consists of 228 articles, which are divided into 10 sections which are made up of several chapters.
The first section provides for the general definitions related to insurance and reinsurance, the form of takaful insurance, microinsurance, the formation of funds, the definition of excess subscription in takaful insurance 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 Insurance Authority.
The draft comprehensive insurance law provides for the registration of licensed insurance companies and their geographical branches, marketing outlets and distribution of their policies in a special register prepared for this purpose by the Authority, 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.
Mr Mohamed Omran, FRA chairman, said that the objectives of the proposed law focus on financial stability and: enhancing the confidence of customers in the activities of insurance companies and private insurance funds, accelerating the digital transformation of insurance companies and private insurance funds, and promoting risk-based supervision in accordance with international standards.