Part 1: Overview of the Law

Highlights

On 9 July 2024, law no. 155 of 2024, which issues the Unified Insurance Law (the “Law”), was enacted. This landmark legislation represents a comprehensive overhaul of Egypt’s insurance regulatory framework by consolidating and codifying existing regulations into a single comprehensive legislation. As a result, several related laws were repealed as of 10 July 2024, including:

1. Law No. 54 of 1975 promulgating the Private Insurance Funds Law.
2. Law No. 10 of 1981 promulgating the Insurance Regulation and Supervision Law.
3. Law No. 72 of 2007 promulgating the Compulsory Insurance for Civil Liability Arising from Accidents of Rapid Transit Vehicles Law.
4. Articles 747-771 of the Civil Law No. 131 of 1948.

Scope of Application

The Law governs all insurance and reinsurance activities, along with associated services, professions, and activities within Egypt. It stipulates that companies subject to the Law must be established as Egyptian joint-stock companies. The Financial Regulatory Authority (“FRA”) is granted exclusive authority to license, supervise, and regulate entities involved in these activities.

FRA Powers and Competencies

The Law provides the restructure of the FRA’s role in response to global and regional insurance market changes. It mandates the FRA to regulate and supervise all insurance and reinsurance activities, as well as their associated professions and services.

Key competencies of the FRA include, but are not limited to:

1. Regulating and supervising all entities involved in insurance activities.
2. Issuing rules and executive regulations governing such activities.
3. Establishing governance rules and disclosure requirements.
4. Setting requirements for consumer protection, anti-money laundering, and combating terrorism financing.
5. Defining rules for digital transformation within the sector.
6. Regulating the approval of insurance policy terms and templates.
7. Establishing investment guidelines for insurance and reinsurance companies and funds.

The Law imposes a new obligation on insurance companies to maintain the confidentiality of clients’ data, prohibiting the disclosure of such data without obtaining prior written consent, except where required by legislation.

It should be noted that the Law prohibits any individual or entity from engaging in insurance activities, directly or indirectly, without obtaining a license from the FRA.

Compliance Period

The Law provides a one (1) year compliance period from its effective date, which is on 11 July 2024, i.e. until 10 July 2025, for entities to comply with its provisions. The FRA may extend this period for additional terms, not exceeding three (3) years.

Objectives and Aims

The Law unifies existing insurance-related legislations, simplifying the regulatory landscape for companies in the insurance sector. Accordingly, it aims to:

1. Allow property insurance companies to expand their services to include credit and agricultural insurance.
2. Protect citizens by introducing new mandatory coverages, including professional liability insurance for doctors, lawyers, and accountants.
3. Address the essentials of compulsory motor vehicle insurance, as previously governed by Law No. 7 of 2007, enhancing industry social responsibility.
4. Increase access to micro-insurance by developing new products tailored to meet specific risks, such as agricultural insurance, to mitigate farmers’ losses.
5. Enhance transparency and accountability within private insurance funds by establishing clear governance procedures.
6. Allow property insurance companies to expand their services to include credit and agricultural insurance.

Dispute Resolution and Appeals

The Law stipulates that most insurance disputes will fall under the jurisdiction of the Egyptian Economic Courts (“ECC”), with certain exceptions adjudicated by the Council of State to expedite resolution. It establishes new Appeals Committees (the “Committee”) to handle appeals against administrative decisions made by the FRA, ensuring transparency in the enforcement of the Law. The composition of the Committee and the appeal process are defined by the Law. It should be noted that appeals must be filed within 30 (thirty) days of the decision’s issuance, and the Committee is required to issue a decision within 30 (thirty) days of receiving all relevant documents. The Committee’s decisions are final and binding. An appeal fee of twenty thousand Egyptian Pounds (EGP 20,000) shall be imposed, which is refundable if the decision is overturned.

Penalties

The Law introduces a range of penalties, in Articles 215-225, for violations related to insurance and reinsurance activities. These include fines ranging from one thousand to twenty million Egyptian Pounds (EGP 1,000 to 20,000,000), with the possibility of higher fines if the financial benefit from the violation exceeds these amounts. In certain cases, imprisonment may also be imposed.

Additionally, the court may prohibit individuals from engaging in insurance or reinsurance activities for up to three (3) years. Moreover, the concept of marginal responsibility is introduced, holding individuals managing companies accountable if they are aware of violations and fail to act. Companies are jointly and severally liable for any penalties or compensation arising from employees’ misconduct.

Major Violations

The Law provides several key violations, which include:

• Engaging in insurance or reinsurance activities, or any related profession, without obtaining a license from the FRA or proper registration.
• Performing the functions of private insurance funds without obtaining FRA registration or after removal from the register.
• Violating standards or professional rules set by the FRA’s Board of Directors.
• Deliberately failing to meet the obligations outlined in insurance documents.
• Representing insurance or reinsurance companies or brokers in Egypt without obtaining FRA licensing.
• Violating pricing regulations in personal insurance.
• Gaining benefits through fraudulent means or negligent reporting, including misrepresenting facts or omitting significant information.
• Delaying the submission of financial statements by insurance companies, private insurance funds, or other entities subject to the Law.