Officials of the Financial Regulatory Authority (FRA) may embed a provision allowing for the incorporation of mutual or cooperative insurers specialising in providing coverage to micro enterprises into a proposed new insurance law.
The introduction of the microinsurance article will bolster the FRA's strategy of ramping up insurance growth as well as generating new opportunities, in addition to approaching international federations specialising in the field, said FRA deputy chairman Mr Reda Abdel Moaty.
This week, a FRA committee chaired by Dr Mohamed Omran, who is the regulatory body's chairman, met the heads of leading insurers, as they proposed promoting insurance coverage of micro and small-sized enterprises (MSEs) through a plethora of legislative incentives, according to a report by Al Mal News.
The new cooperative insurers will be allowed to engage in both life and property insurance, even though current legislation stipulate that life and property insurance businesses are to be carried out by separate entities, he said.
In addition, regular insurance companies operating in the market would not be prevented from covering risks associated with micro enterprises, but they would be bound by existing rules, especially those related to the separation of life and property.
Dr Omran said that all associations and dealers engaged in microfinance can market the microinsurance products. They will be classified into categories A, B and C, depending on the financial solvency of each organisation or financing institution and its ability to lend.
He also revealed that the insurance advisory committee is studying the possibility of waiving reinsurance agreements under certain technical conditions, including the company's experience, the size of its portfolio, its capital and its financial reserves, especially for companies that can bear the risk and retain the premium.
As an indication of market size, Mr Ahmed Morsi, managing director of Misr Takaful Insurance, said that there are at least three million microcredit customers, of which only 400,000 deal with banks directly, and 2.6m customers receive loans through finance associations.