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Tuesday, 6 August 2019

FRA give itself more power in Insurance Act

LEGISLATION WATCH- FRA makes new amendments to the Insurance Act: The financial Regulatory Authority (FRA) has made new amendments to the final draft of the Insurance Act to encourage financial inclusion, Youm7 reported. The amendments include requiring insurance companies to present a certificate from a CBE-registered bank as proof that they have deposited at least EGP 500k for every branch they have or a maximum of EGP 3 mn for all their branches combined. The companies would require an approval from the FRA to use these deposited funds. Insurance companies would also be required to pay EGP 20k to register every new branch. Click here to read the decree of the act.

Medical Insurance companies: The new amendments also grant the FRA the right to license medical insurance companies, and requires these companies to seek regulatory approval before opening a new branch or distribution unit, and before making transactions. Medical insurance companies must have at least EGP 60 mn in paid-up capital or its equivalent in a foreign currency.

Property and life insurance companies would be required to deposit EGP 150 mn or its equivalent in a foreign currency. This amount will increase by EGP 50 mn if any branches are involved in oil, aviation or energy-related activities. The companies shall rely on cumulative voting to elect the board of directors.

Background: The FRA recently granted itself sweeping new powers to regulate the insurance industry under the final draft of the Insurance Act. The latest draft also reverses an article that banned any insurance company shareholder from acting as chairman or CEO. The bill will still double the ceiling for life insurance payouts to EGP 100k, from EGP 40k currently.

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