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Thursday, 12 November 2020

FRA granted sweeping powers as Unified Insurance Act gets cabinet approval

CABINET WATCH- Market regulator a step closer to getting sharper teeth as cabinet approves Unified Insurance Act: New extensive powers for the Financial Regulatory Authority (FRA) to regulate the establishment, licensing and oversight of insurers and reinsurers as well as related services, professions, and activities are inching closer to becoming the law of the land after the Madbouly Cabinet approved the the long awaited Unified Insurance Act in its weekly meeting yesterday, according to a statement.

Refresher: The law brings under its purview microinsurance institutions and private insurance funds, according to the statement, which was scant on further detail. According to earlier drafts, the bill would also give the FRA the authority to regulate medical insurers and monitor bank deposits.

Insurance would also become compulsory for individuals and institutions: We had noted that compulsory insurance for SMEs and new freelance and seasonal job insurance regulations would be key components of the draft. Recent amendments to the legislation would make insurance mandatory in 21 cases covering everything from non-banking financial services to student health coverage to marriage, according to Masrawy. The law would also appoint economic courts as the arbitrators in any disputes arising from the implementation of the law, with the exception of cases that come under the jurisdiction of the State Council, the statement said.

The Unified Insurance Act has been in the pipeline since 2018: According to draft details leaked last year, the Act should raise the minimum requirement for the issued and paid-in capital of life and property insurance companies by 150% to EGP 150 mn, and by as much as 733% for reinsurance companies. The bill also doubles the ceiling for life insurance payouts to EGP 80k.

Also from Cabinet yesterday: Treasury bills and sovereign bonds sold on international markets are now exempt from income tax, the cabinet also decided in its meeting. Egypt listed USD 750 mn in green bonds as well as bonds from its record USD 5 bn Eurobond offering earlier this year on the London Stock Exchange (LSE). The LSE currently carries 40 issuances by the Arab Republic of Egypt.

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