Egypt: FRA issues decree on compulsory motor insurance consortium
Source: Middle East Insurance Review | May 2019
The Financial Regulatory Authority (FRA) has issued a decree establishing the compulsory motor insurance consortium, as well as a proposed cooperative insurer licensed to manage this branch of insurance on behalf of consortium members which are insurers.
The establishment of the consortium is an important step for the insurance industry, said FRA chairman Dr Mohamed Omran. It had been overdue for more than 10 years because it should have been formed on the implementation of the 2007 law on compulsory insurance.
Dr Omran stressed that the activation of the compulsory motor insurance consortium will eliminate negative practices in this class of business, including fraudulent policies that have resulted in a decline in compulsory motor premium income in the previous financial year.
The consortium will undertake compulsory motor insurance operations, including issuing policies, settling compensation claims and dealing with customers digitally. It will also maintain a comprehensive database related to compulsory motor insurance that will allow a more accurate review of pricing so as to arrive at fairer premiums.
He added that property insurers will become members of the consortium. The system will review the market shares of the companies every two years in accordance with controls determined by the FRA, the most important of which is the solvency requirement.
The consortium will manage the motor accident fund, prepare related financial statements, and hold sufficient funds to meet obligations towards policyholders and make financial settlements with insurers through a joint account according to the shares of the companies.
Priority would be given to appointing staff of the consortium from among the current employees of insurers who work directly in the insurers’ compulsory motor insurance departments, he said. M