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Tuesday, 8 January 2019

Draft Insurance Act details leaked

LEGISLATION WATCH- Insurance Act to substantially increase minimum capital requirement for insurance companies: The new Insurance Act would raise the minimum requirement for the issued and paid-in capital of life and property insurance companies by 150% to EGP 150 mn, according to details of the law that leaked on Sunday, courtesy of Al Mal. Property insurance companies would have to tack on an additional EGP 300 mn to that figure if it plans on providing insurance in the aviation industry or fuel hedging services. Reinsurance companies, meanwhile, would see their minimum capital requirements jump 733% to EGP 500 mn, from a current EGP 60 mn.

Other elements of the draft: If passed, the bill would also double the ceiling for life insurance payouts to EGP 80,000, from EGP 40,000 currently. The draft also confirms earlier reports that the insurance cover for public gatherings and venues (such as malls and concerts) would be made mandatory under the bill. The draft law would also require individuals with liability-prone professions (such as doctors and architects) to obtain liability insurance.

Background: The Financial Regulatory Authority (FRA) had announced last year that it was drafting a new Insurance Act that would make it the primary regulator for the sector, governing everything from the establishment and licensing of insurance companies, to setting best practices and industry standards, and regulating transactions, contracts, and policies. FRA deputy head Reda Abdel Moaty had said last month that the authority would submit the bill to its board for approval and present a final draft to the Madbouly Cabinet by the end of the month.

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