El Sisi ratifies Unified Ins. Law — what does that mean for the ins. market?

El Sisi ratifies Unified Ins. Law: President Abdel Fattah El Sisi has given the final approval for the Unified Ins. Law, which will draw up new, comprehensive rules for regulating the ins. industry and widen compulsory coverage, according to the Official Gazette.

What it entails: The law will “regulate ins. companies, special funds, obligatory operations such as highway accidents, and state the new supervisory rules for the ins. industry,” House Economic Affairs Committee head Mohamed Soliman said in April.

New capital requirements: Ins. companies will need a minimum issued and paid-up capital of EGP 250 mn or its equivalent in FX, up from EGP 60 mn, under the newly-ratified law. Providers of general and property ins. must increase their issued and paid-up capital by EGP 50 mn if they provide ins. for oil, aviation, or energy ins.

A one-year deadline: Ins. companies have one year to meet the new capital requirements — the Financial Regulatory Authority (FRA) head may extend this deadline for up to two years. The capital increase could bring in EGP 2.9 bn of fresh capital to the market, ins. broker Mohamed Elghatrefy told Enterprise.

Ins. companies operating in the market have sufficient financial solvency to meet the new capital requirements, Ins. Federation of Egypt Chairman Alaa El Zoheiry told Enterprise. Elghatrefy added that it is unlikely that firms will turn to the EGX to raise capital to meet the new requirements as shareholders prefer to retain their shares.

The law allows for the establishment of specialized microinsurance companies with issued and paid-up capital of EGP 30 mn, permitting them to combine general and life ins. activities, which “represents a significant leap towards financial and ins. inclusion,” El Zoheiry told us.

We could be welcoming new compulsory ins. soon: The law allows the FRA to propose a set of compulsory ins. policies, suitable for the Egyptian market, to be enacted by a cabinet decision specifying the categories, conditions, regulations, and prices for each type. That includes professional indemnity ins., ins. against digital risks for NBFS firms, and marital settlement agreements — aka divorce ins.

The key to expanding the sector: Introducing more compulsory ins. to the market is the key to expanding the ins. sector, El Zoheiry told Enterprise, adding that the decision comes after years of ins. companies calling for more mandatory ins. to help them expand and increase the number of ins. customers.

Larger payouts for car accident victims: The law raises the compensation granted for victims of car accidents to EGP 100k, up from EGP 40k, in cases of death or total permanent disability.