Article 157 of the unified insurance bill, which was finally approved by the senate in Egypt, has outlined four obligations for takaful providers that adopt the mudaraba model. Firstly, distributing the surplus to the participants by not less than 50%, in accordance with the distribution mechanisms mentioned in the company’s articles of association, after consulting the shariah supervisory board.
In addition, the surplus of the participants shall be set aside in a special account; and the portion that the company is unable to distribute to the participants should be donated in charitable causes or donations determined by the company in accordance with the rules and regulations issued by the Financial Regulatory Authority.
Thirdly, operators working with the mudaraba model are required to pre-announce the nature of their products and clarify the ratios of surplus distributions to participants and its mechanisms.
Lastly, operators are requested to adhere to the technical provisions that the company must maintain in accordance with the provisions of article (138) of this law, and the operator must create a reserve to cover the deficit of the takaful account.
The draft unified insurance law aims to draw specific and comprehensive rules for the insurance industry in Egypt, regulate the rules for supervision and control over them and set the rules stipulated in the Private Insurance Funds Law, the Insurance Control and Supervision Law and the Compulsory Insurance Law for civil liability arising from motor accidents.
The new law would consolidate all laws governing the insurance sector into one piece of legislation. The senate approved the unified insurance bill on 11 April. The proposed 217-article law will next be referred to the house of representatives to be debated and voted on. M