Legislative, regulatory overhaul to enhance insurance’s role in Egypt’s economy: FRA chief
Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), engaged in a broad and insightful conversation with the Insurance Committee of the American Chamber of Commerce, discussing the FRA’s strategy and its comprehensive policies designed to elevate the insurance sector’s role in Egypt’s national economy. The dialogue touched on ongoing measures, plans, and programs aimed at enhancing the sector’s competitiveness, fortifying its overall stability, and addressing developmental gaps. Farid highlighted the landmark Unified Insurance Law, which was enacted last year, providing a holistic and integrated legal framework for regulating the sector. The law incorporates global best practices while aligning with Egypt’s national developmental priorities.
Farid began by outlining the philosophy and objectives of the Unified Insurance Law No. 155 of 2024, which consolidates four previous insurance laws into a single, comprehensive framework. He emphasized that the law reflects international practices and advancements, while also aligning with Egypt’s broader developmental goals, particularly regarding insurance inclusion. Farid stressed the need to move away from outdated business models, advocating for a significant shift toward technology-driven approaches to ensure the sector’s growth, enhance its contribution to the national economy, and unlock its full potential.
The law’s philosophy focuses on ensuring the financial stability of entities operating within the insurance sector, supporting efforts to expand insurance inclusion, and accelerating digital transformation. The FRA is committed to expanding the insurance sector by improving governance and safeguarding policyholders’ rights, aiming to extend insurance services to a broader base of beneficiaries.
Farid highlighted that the FRA has established specialized committees and working groups to prepare the necessary regulations and executive decisions, ensuring they are aligned with market needs and sector requirements. Furthermore, the FRA emphasizes continuous engagement with stakeholders to gather feedback and suggestions, optimizing the developmental impact of the legislation and streamlining decision implementation. This approach is designed to foster the growth of non-banking financial markets while protecting the rights of all participants.
Farid further discussed how the Unified Insurance Law is integral to expanding insurance inclusion and broadening the pool of beneficiaries. The law includes provisions for mandatory insurance products that will positively impact the national economy and GDP. It grants the FRA’s Board of Directors the authority to propose suitable mandatory insurance products based on specialized studies, with final approval from the Cabinet. These products include coverage for government assets, divorce risks, cyber risks, and specific professional liabilities, all of which are under review for gradual implementation to benefit all stakeholders.
Farid also pointed to the impressive growth in the insurance sector, with total premiums reaching EGP 82.3bn for the fiscal year ending June 2024, marking a 34.1% increase compared to EGP 61.4bn in the previous year. Claims paid increased by 34.2%, rising to EGP 36.7bn, up from EGP 27.3bn, while total investments in the sector surged to EGP 298.2bn by June 2024, compared to EGP 208.8bn in June 2023.
Farid underscored the critical role of microinsurance in fostering economic development, especially in the wake of challenges such as the pandemic, geopolitical risks, inflation, and climate-induced disasters. These factors have heightened the responsibility of insurance companies to provide appropriate coverage, protecting the national economy and individuals from such risks.
Microinsurance has been pivotal in increasing insurance inclusion, offering coverage to small, medium, and micro-enterprises. Insurance companies have partnered with microfinance institutions and associations to offer protection against risks like death and disability for recipients of small loans.
Additionally, Farid referenced the FRA’s issuance of Decision No. 196 of 2024, setting the minimum capital requirement for microinsurance companies at EGP 40m. This decision is aligned with the FRA’s supervisory role in the non-banking financial market, and aims to boost the insurance sector’s capacity to contribute meaningfully to the national economy in line with the Unified Insurance Law.
Farid emphasized the necessity of digital transformation for insurance companies, asserting that achieving widespread insurance inclusion is impossible without embracing digital and technological solutions. He acknowledged the challenges brought on by technological advancements and stressed that regulatory authorities must safeguard market participants’ rights while ensuring sector stability. He also highlighted the pivotal role of financial technology in driving financial inclusion, noting that efforts to expand insurance access would be ineffective without technology.
The FRA is committed to issuing a series of regulations and decisions aimed at strengthening the sector, expanding its beneficiary base, and introducing new insurance products. These efforts align with the law’s requirements and are designed to meet the evolving needs of both businesses and individuals.
Farid concluded by reaffirming the FRA’s dedication to ensuring that its decisions contribute to the sector’s growth and stability, benefiting the national economy and society as a whole. He emphasized the FRA’s focus on enabling individuals to access non-banking financial services, helping them achieve their financial goals and improve their quality of life through diversified investment options and tailored insurance solutions.
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