Egypt’s FRA Strengthens Policies to Boost Efficiency and Competitiveness in Insurance Sector

Mohamed Farid, Chairperson of Egypt’s Financial Regulatory Authority (FRA), delivered the keynote address at the sixth annual Insurance and Reinsurance Forum in Sharm El-Sheikh. Organized by the Insurance Federation of Egypt, this year’s conference, titled “A Future Vision for Developing the Insurance Industry,” explored key trends in insurance and encouraged collaboration across the sector. Notable attendees included Minister of Supply and Internal Trade Sherif Farouk, and key FRA officials such as Vice Chairperson Islam Azzam.

During his speech, Farid emphasized the significance of the newly enacted Unified Insurance Law, a transformative step aimed at expanding insurance coverage and strengthening the legal framework that governs Egypt’s insurance market. The FRA Board now holds responsibility for drafting regulations to support the sector’s growth and ensure market stability.

Farid outlined that the Unified Insurance Law aims to enhance digital financial transactions and promote fintech integration. Specialized committees and workgroups have been established to engage with stakeholders and draft regulatory frameworks that address evolving market needs. Additionally, FRA issued Resolution No. 147 of 2024 to maintain current regulations until new directives under the law are finalized, safeguarding sector stability during this transitional period.

New resolutions from FRA’s Board of Directors are also setting guidelines for the sector. Resolution No. 223 of 2024 requires insurance companies to comply with updated regulatory standards by December 1, 2024. Resolution No. 183 of 2024 standardizes the fiscal year for insurance companies, aligning it from January through December to streamline financial reporting.

FRA’s broader objectives for the new law include increasing the insurance-to-GDP ratio and broadening coverage through compulsory insurance, insurance pools, and specialized insurance products, such as agricultural and micro-insurance. These developments are evident in the strategic partnership between Post for Investment and AXA Egypt to launch Egypt’s first microinsurance company, with additional plans to extend microinsurance distribution through telecommunications companies.

In another step to adapt to economic shifts, FRA’s Decision No. 80 of 2024 raised the microinsurance cap by 10%, setting the maximum coverage limit at EGP 242,000. This increase is expected to better accommodate market changes while promoting sector growth.

The FRA is working to establish new governance standards for insurance companies, addressing board diversity, committee responsibilities, and conflict-of-interest policies. Additionally, FRA aims to strengthen companies’ financial solvency by updating capital adequacy requirements based on risk assessment.

To drive digital transformation, FRA issued the Financial Technology Law 5 of 2022, which permits the use of fintech across non-banking financial activities. In 2023, FRA furthered this initiative with Resolution 139, outlining technological infrastructure requirements, Resolution 140, which establishes protocols for digital identity and contracts, and Resolution 141, which addresses the outsourcing of customer identification services. These resolutions provide a secure digital framework for non-banking financial services.

The FRA’s Circular No. 3 aims to boost cybersecurity within non-banking financial institutions, a critical component of digital transformation and financial inclusion. Resolution No. 69 of 2023 mandates that insurance companies upgrade their technological infrastructure to enable real-time data sharing with FRA, enhancing regulatory oversight and facilitating data-driven decisions.

As part of its commitment to financial inclusion, FRA recently partnered with the National Telecom Regulatory Authority to expedite the digitization of non-banking financial transactions. Resolution No. 186 of 2024 mandates the use of financial technology across non-banking financial activities, while Resolution 211 of 2024 updates electronic collection protocols for insurance policy premiums.

A recent collaboration between Misr Life Insurance and e& Egypt illustrates FRA’s support for expanding insurance access through telecommunications. This partnership aims to make insurance products more widely available, promoting broader financial security.

Farid highlighted FRA’s role in supporting Egypt’s national savings goals. The insurance sector, he explained, is instrumental in building a robust savings culture and safeguarding individuals and institutions from financial risk, which bolsters economic stability and social cohesion.

To meet the demands of a digital future, FRA is developing policies and procedures for secure and stable digital insurance services. Farid stressed that technological advancements necessitate heightened regulatory measures to protect client rights and ensure service reliability.

As part of the conference’s commitment to environmental responsibility, Farid joined leaders from Egypt’s insurance sector in a tree-planting initiative in Sharm El-Sheikh, offsetting the carbon emissions from the travel of conference participants. This initiative underscored the FRA’s alignment with sustainable practices and environmental stewardship within the financial sector.