Egypt: Proposed new insurance law covers private insurance funds
Source: Middle East Insurance Review | May 2019
Egypt’s proposed new insurance law aims to update standards and requirements for the formation and remuneration of members of the boards of directors of private insurance funds.
The updates also include ensuring that the relative weight of the representation of the members of the board of directors be in accordance with the geographical distribution of the members of the insurance fund as much as possible, according to local media reports citing the Financial Regulatory Authority (FRA).
The FRA recently held a feedback session on the draft comprehensive insurance law with representatives of major private insurance funds. The regulator said the insurance law regulates the voluntary pension funds of a broad category of labour groups in Egypt. The funds, numbering 570, had a total membership of about 4.8m at end-2018. These funds had assets of about EGP70bn ($4bn) and reserve funds of nearly EGP65bn.
Private insurance funds are schemes established in companies or associations that also pay benefits or periodic salaries to members who find themselves in need.
Dr Mohamed Omran, FRA chairman, said the Authority was keen to listen to the views of the managers of these private insurance funds and their proposals with respect to amendments to the new law because of the vital role played by these funds in the provision and management of pension schemes.
Other proposed amendments to the insurance law that would affect private insurance funds include:
- Entrusting the management of private insurance funds to a specialised investment manager, and the possibility of providing a presentation of the funds’ investment reports to fund members at a general meeting;
- Reducing the intervals between actuarial examinations of the financial positions of private insurance funds to three years instead of the stipulated period of five years in the current law, with the FRA given the right to ask for an examination at any time before the three-year timeline; and
- Granting the FRA the right to request amendments to fund regulations in the event of surpluses or deficits in order to achieve social justice among generations of members.
Dr Omran also said that one of the most important features of the amendments proposed in the comprehensive insurance law is to allow the establishment of special insurance funds in accordance with the three internationally recognised parameters: defined benefits, defined contributions, and a mixed system. The amendments will also set out the mechanisms and requirements of switching from one system to another. M
EGP1 = $0.06