Egypt:Regulator tightens underwriting controls to combat fraud in individual insurance

The Financial Regulatory Authority (FRA) has issued a decision establishing stricter risk management and underwriting standards for the individual personal insurance branch.

Enacted to implement the provisions of the Unified Insurance Law of 2024, the decision aims to enhance underwriting efficiency, strengthen customer verification controls, and curb fraud and deception in the insurance market.

Under the new regulations, all personal insurance companies must implement a standardised application form. This form requires comprehensive disclosures regarding the client's basic data, health status, and financial situation to ensure accurate risk assessment prior to policy issuance.

Furthermore, applicants must personally complete and sign every page of the application, initialising any modifications made to the clauses. Insurers are strictly required to verify the applicant's identity and validate all submitted documents before issuing a policy.

Enhanced financial and background checks

The directive introduces rigorous financial scrutiny for high-value policies. Insurers must evaluate the credit history and creditworthiness of any applicant seeking a policy with a sum assured of EGP10m ($198,000) or more (or its foreign currency equivalent) via licensed credit assessment agencies.

This financial vetting also applies if:

• The applicant's income or profession does not align with the insured amount or premium value.

• There is any suspicion surrounding the legitimacy of the application.

Additionally, insurers must cross-reference applicants against negative lists, review their historical insurance records for compliance, and verify mobile phone ownership data in accordance with local regulations.

Fraud detection and reporting

To combat systemic fraud, insurance companies are required to monitor:

• Duplicate coverage: Repeated insurance applications covering the same risks for the same insured individual.

• Risk patterns: The likelihood of similar risks across multiple insured individuals, requiring analysis of geographical, social, or temporal links to detect abnormal trends.

Insurers must immediately notify the FRA upon discovering any fraud or deception during the underwriting process.

Compliance timeline

These newly mandated controls must be formally integrated into the underwriting policy of each insurance company. Insurers have been granted a three-month grace period from the implementation date to fully comply with the new regulations.