October 29, 2024

Egypt’s New Unified Insurance Law: A Transformative Step for the Insurance Sector

Egypt introduced the Unified Insurance Law No. 155 of 2024, marking a significant overhaul of the regulatory framework governing the insurance and reinsurance sector. This comprehensive law, which consists of 224 articles organized into three chapters, took effect on July 11, 2024, and aims to streamline and modernize insurance practices in Egypt.

Key Highlights of the Unified Insurance Law

1. Consolidation of Previous Laws:

The Unified Insurance Law replaces several outdated regulations, including the Private Insurance Funds Law No. 54 of 1975, the Control and Supervision of Insurance in Egypt Law No. 10 of 1981, and the Compulsory Insurance Law No. 72 of 2007. This consolidation simplifies the regulatory landscape for insurers and enhances legal clarity.

2. Regulatory Authority:

The Egyptian Financial Supervisory Authority (FRA) retains its role as the primary regulatory body overseeing the insurance sector. This continuity ensures a stable regulatory environment as companies adapt to the new framework.

3. Reconciliation Period:

Companies impacted by the new law have one year from its enactment date to comply with its provisions, with the FRA having the discretion to extend this period by up to three years. This grace period allows businesses to adjust their operations accordingly.

4. Categorization of Insurance Activities:

The law categorizes insurance activities into four key areas:

  • Personal Insurance: Life insurance, long-term medical insurance, retirement plans, and more.
  • Property and Liability Insurance: Coverage for fire hazards, transportation, and engineering risks, among others.
  • Medical Insurance: Both long-term and short-term policies.
  • Micro-Insurance: Targeted at low-income earners with coverage limits not exceeding EGP 200,000 annually.

5. Private Insurance Funds:

The law provides a detailed framework for establishing and operating private insurance funds, which are created by groups of individuals sharing a profession or social connection. These funds are funded through member contributions and must be registered with the FRA to gain legal status.

6. Takaful Insurance:

The law recognizes Takaful insurance contracts, emphasizing cooperative risk-sharing among participants. This inclusion opens up opportunities for companies to establish Takaful-focused operations, catering to a growing market segment.

7. Compulsory Insurance Provisions:

The FRA is empowered to define compulsory insurance types based on market needs. This could include insurance for professional liability, school students, and risks associated with electronic hazards.

8. Insurance Union Framework:

The law establishes an Insurance Union, a non-profit entity consisting of insurance and reinsurance companies. This union aims to foster collaboration and representation within the sector.

9. Licensing for Foreign Entities:

The FRA can now issue licenses for representative offices of foreign insurance companies, facilitating market entry and exploration of business opportunities in Egypt.

10. Professional Standards and Grievance Mechanisms:

The law delineates the roles and responsibilities of insurance professionals and establishes a grievance committee to handle administrative disputes, enhancing accountability and transparency.

11. Sanctions for Non-Compliance:

The law outlines strict sanctions for violations, ranging from monetary fines to imprisonment. Companies must be vigilant to avoid penalties that could impact their operations.

Enhancing Accessibility and Digital Transformation

In a significant move towards digital transformation, the FRA has partnered with telecommunications companies to promote insurance products. This collaboration aims to improve accessibility to insurance services through retail outlets, facilitating greater consumer engagement. Resolutions allowing insurance companies to market their services in telecom stores further enhance outreach efforts and financial inclusion.

Conclusion

The Unified Insurance Law represents a transformative shift in Egypt’s insurance landscape, creating a more cohesive and efficient regulatory framework. For legal and corporate professionals, this law offers both challenges and opportunities. Companies must adapt swiftly to comply with the new regulations while capitalizing on the potential for growth in a more structured market.

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