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Daily News Egypt
19 hours ago
- Business
- Daily News Egypt
FRA issues temporary licensing conditions for medical insurance, healthcare programme firms
The Financial Regulatory Authority (FRA), under the leadership of Mohamed Farid, has issued Decision No. 90 of 2025, introducing a temporary licensing framework for specialist medical insurance companies and healthcare programme management firms. This initiative is intended to facilitate continued operations by these entities while they align with the provisions of the Unified Insurance Law No. 155 of 2024. According to a statement by the FRA, the new measures aim to support existing service providers within a defined regulatory framework, ensuring continuity while mandating a structured path toward full compliance. Firms newly entering the market must apply directly for permanent licensing under the same law. Under the decision, companies must submit an application for temporary licensing, committing to a detailed plan for achieving full regulatory alignment. If firms fail to meet the requirements within the designated timeframe, their temporary status will be revoked. A grace period for compliance has been granted through FRA Decision No. 102 of 2025, extending the deadline to 11 July 2026. The licensing conditions were developed following multiple rounds of stakeholder consultation, with the FRA emphasizing the importance of practical implementation and alignment with market dynamics. To qualify for a temporary licence, companies must be established as joint-stock entities with fully paid-up capital and shareholder equity at least equal to the paid-in capital. Specialist medical insurance firms are required to have a minimum capital of EGP 10m at the time of application. Additionally, these firms must demonstrate a portfolio of long-term insurance contracts valued at no less than EGP 100m, with contracts in place dating back at least three years before the law's enactment. Applicants must also demonstrate adequate operational infrastructure and up-to-date IT systems appropriate for their business activities. A qualified administrative team is mandatory. For medical insurance firms, this includes a managing director, an underwriting officer, and a claims officer. Healthcare programme administrators must appoint a managing director, a claims officer, and a medical approvals officer. These individuals are subject to FRA-administered competency evaluations. Auditors must be selected from the FRA's approved registry—Section I for insurance companies, and either Section I or II(A) for healthcare administrators. In addition, companies are required to submit a comprehensive compliance plan detailing the timeline and strategy for capital increases in accordance with FRA Decision No. 196 of 2024. No profit distribution to shareholders is permitted until capital requirements are fulfilled, unless explicitly authorised by the FRA. The application process also requires a full set of supporting documents, including an updated company statute, a recent extract from the commercial registry, a valid tax identification number, and legal proof of no prior bankruptcy rulings. Firms must also disclose their shareholder structure and provide board member declarations confirming the absence of criminal or bankruptcy history. Audited financial statements—either annual or quarterly—must be included, and the FRA reserves the right to request additional documentation as needed. Through this decision, the FRA seeks to maintain market integrity while ensuring that firms transition smoothly into compliance with the new insurance framework.
Zawya
11-02-2025
- Business
- Zawya
Egypt's FRA updates investment rules for insurance companies
Egypt - The Financial Regulatory Authority (FRA), under the leadership of Mohamed Farid, has issued Decision No. 2 of 2025, introducing new investment rules and ratios for the funds of insurance and reinsurance companies. This initiative aligns with the authority's ongoing efforts to establish flexible regulatory frameworks that allow companies to diversify their investment channels, improve efficiency, and enhance the financial stability of the insurance sector, all while adhering to governance and risk management principles. The new regulations apply to all entities engaged in insurance, reinsurance, takaful insurance, specialized medical insurance, microinsurance, and any other specialized insurance activities as defined by the Unified Insurance Law No. 155 of 2024. Under the revised rules, insurance and reinsurance companies must allocate a minimum of 5% of their free funds to open-end investment funds focused on listed stocks on the Egyptian Exchange (EGX). With FRA approval, direct investments in listed stocks may contribute to this 5%, provided that investments do not exceed 5% of the company's paid-up capital or 15% of a fund's net asset value, whichever is lower. Free funds refer to shareholder equity, while allocated funds represent the obligations of insurance companies toward policyholders and beneficiaries. For allocated funds, companies are required to invest at least 2.5% of their paid-up capital in open-end investment funds that specialize in listed stocks. The same investment caps—5% of paid-up capital or 15% of a fund's net asset value—apply. With FRA approval, direct stock investments may also fulfill this 2.5% requirement. However, total investments in stocks and open-end investment funds must not exceed 30% of allocated funds. The decision also imposes a 5% limit on investments in commodity and metal funds or any exchange-traded instruments backed by metals on EGX. In the real estate sector, life insurance companies may invest up to 10% of their invested funds in real estate funds, while property and liability insurers are limited to 5%. Given the long-term nature of life insurance investments, the same 5% or 15% cap applies to investments in individual real estate funds. However, these restrictions do not apply to real estate funds established by insurance companies themselves. For the first time, FRA is introducing regulations for investments tied to unit-linked insurance policies. Companies must segregate these investment-linked funds into independent accounts managed through a dedicated electronic system. Additionally, they are required to maintain a detailed investment register that includes policy numbers, client names, invested amounts, investment instruments, portfolio returns, and any other data requested by the FRA. Article 10 of the decision stipulates that existing investments exceeding the newly introduced limits will remain valid, but further exceedance is prohibited. Companies must meet the minimum allocation requirements outlined in Article 8 within six months of implementation. A key provision in the new regulations mandates public disclosure of investment performance. Companies must publish returns and unit prices for unit-linked policies separately for each investment portfolio on their websites, updating this information at least once a month. Additionally, total costs, fees, and other charges associated with managing these investments must not exceed the amounts specified in FRA-approved insurance policies. The FRA emphasized that these regulatory updates are in line with Law No. 155 of 2024, which has been in effect since July 2024. They reflect ongoing developments in the insurance and reinsurance sector while ensuring compliance with global best practices. Companies are also required to conduct client risk assessments, evaluating factors such as age, financial status, investment objectives, and risk tolerance. These assessments must be updated at least once a year. Furthermore, electronic systems should allow clients to track their investments and view any associated deductions in detail. Investment rules have also been established for contracts related to wealth accumulation plans. Companies must separately manage funds linked to such contracts while ensuring compliance with FRA-approved cost structures and conducting annual risk assessments for clients. Additionally, all companies must adopt an investment policy approved by their board of directors and, for takaful insurers, their Sharia supervisory board. This policy must align with acceptable risk levels, ensure diversification of investment portfolios, and optimize returns while considering risk factors. The policy must also incorporate scientific methodologies for evaluating risks, measuring expected returns, and conducting stress testing and scenario analysis to assess the company's resilience against financial shocks or economic downturns. The decision further mandates that companies implement control measures to prevent errors, negligence, and conflicts of interest in investment portfolio management. They must also establish procedures for addressing any conflicts that may arise, ensuring that policyholders' and beneficiaries' interests remain safeguarded. Companies are expected to achieve competitive average returns within acceptable risk levels as determined by their board of directors. To ensure regulatory compliance, insurance companies must submit their investment policies to the FRA annually and notify the authority of any amendments. They are also required to provide regular investment reports that adhere to the highest governance standards, reinforcing policyholder and beneficiary rights. The FRA affirmed that these measures are designed to enhance confidence in the insurance market by ensuring the prudent management of insurance company funds, striking a balance between maximizing returns and protecting customer interests.
