Decree No. 193 of 2022, Regulating the Underwriting of Credit and Guarantee Insurance Policies


On 28 December 2022, the Financial Regulatory Authority (the “FRA”) issued Decree No. 193 of 2022 (the “Decree”) regulating the issuance by property and liability insurance companies of credit and guarantee insurance policies falling within the scope of the miscellaneous incidents insurance. The Decree came into effect on 13 January 2023.


The Decree imposes certain requirements that property and liability insurance companies must observe when contracting with credit-granting institutions (including banks and non-banking financial services companies) to issue credit and guarantee insurance policies. Such requirements include, inter alia, the following: (i) credit-granting institutions shall partially bear the risk by imposing a compulsory deductible on all credit and guarantee insurance policies of not less than 25% (twenty-five per cent) of the value of the loan or credit facility, which is to be imposed if the insured risk materializes; (ii)  separate accounts shall be created and maintained for transactions pertaining to credit and guarantee insurance and such accounts must be segregated from the accounts concerning the miscellaneous incidents insurance; and (iii) reinsurance agreements must be concluded with multiple reinsurance companies (provided that they are duly licensed by the FRA and have sufficient experience)  to avoid the concentration of business with a single entity.

Furthermore, the Decree tasked the Insurance Federation of Egypt (the “IFE”) with unifying the terms and conditions of credit and guarantee insurance policies, which are to be applied across all insurance companies. Such terms and conditions shall include, amongst other things, the lapse of the beneficiary’s right to benefit from the insurance proceeds if the credit granting institution breaches the credit approvals and/or the credit policies and the credit assessment. It is also worth noting that the Decree imposes an obligation on the IFE to incorporate a section that lists the guarantee insurance clients who are distressed or are defaulting on their dues into their electronic insurance platform. The Decree clarified that the purpose of such a section is to enable insurance companies to investigate their potential clients prior to issuing policies.


To conclude, the Decree has introduced significant regulations in relation to the issuance of credit and guarantee insurance policies to streamline the process and the relationship with credit-granting institutions as well unifying the terms and conditions of credit and guarantee insurance policies.