The board of the Financial Regulatory Authority (FRA) has directed insurers to set aside a reserve to deal with the risks of applying the Egyptian Accounting Standard No. 47 for Financial Instruments to insurance companies.
The reserve is to be built up by allocating funds equivalent to 1% of total assets from the net profit after withholding tax for the last fiscal year ended 30 June 2020.
The Authority recommended that insurance companies' boards of directors take heed of:
1- Setting out requirements for implementing the accounting standard and removing any obstacles that may face implementation.
2- Determining the business models to be used when applying the standard.
3- Measuring the adequacy of information systems and providing human resources and expertise.
4- Developing risk management as well as underwriting and investment policies.
5- Coordinating between the various departments of the company, including the technical and financial departments, risk management, information technology management, internal auditing and all concerned departments in this regard.