An insurance or reinsurance broker is defined as any natural or legal person licensed by the FRA to mediate insurance or reinsurance operations for insurance or reinsurance companies, in exchange for a salary, fee, or commission, and who is registered in the dedicated registry.
The decision implements Law No. 155 of 2024 concerning
unified insurance, issued in July 2024. It also reflects the FRA's ongoing
efforts to regulate the insurance and reinsurance brokerage market, improve the
competency of its practitioners, align with global developments, protect the
rights of clients and beneficiaries of insurance services in the Egyptian
market, and boost insurance awareness, inclusion, and investment.
The new professional standards introduce several controls,
including mandating all insurance professionals covered by the unified
insurance law, including insurance and reinsurance brokers, to register on the electronic
platform for professionals within 45 days of the decision's effective date. An
extension may be granted for reasons acceptable to the FRA.
The decision also increases the registration period for all
brokers in the designated registry from three to five years, renewable. Brokers
must initiate renewal procedures at least three months before their
registration expires. This aims to standardize obligations across all insurance
sector professionals, in line with the unified insurance law.
Furthermore, the decision obliges insurance, reinsurance,
and brokerage companies to notify the FRA within one week if any employed
brokers' services are terminated. The company remains responsible for any
violations committed by the broker until the FRA is notified of the termination
and its reasons.
The new rules stipulate that board members of brokerage
companies must not have been convicted of any dishonorable offenses within the
five years preceding their application. They also cannot be board members or
employees of insurance companies, must not have any legal incapacities, possess
integrity and a good reputation, and fully exercise their civil rights.
If a brokerage company is founded by a foreign company or
financial institution subject to the supervision of a relevant foreign
authority in its home country, that authority must approve its operations in
Egypt, and the principle of consolidated supervision must be applied.
The decision also requires the board of directors to include
at least two members with expertise in insurance or insurance brokerage, one
executive and one independent. No board member of a brokerage company can
simultaneously be a board member of another company engaged in the same
activity or an insurance or reinsurance company, or be employed by such
entities.
Companies are now required to have a minimum issued and
paid-up capital of EGP 5 million for insurance and reinsurance brokerage firms,
in accordance with FRA Board Decision No. 196 of 2024 and the unified insurance
law.
All brokerage companies are mandated to open at least two
branches within three years of commencing activity, with each branch managed by
a registered insurance broker. This aims to ensure wider geographical reach,
increase public awareness of insurance activities, and attract all segments of
the population.
The decision restricts reinsurance brokerage activities to
legal entities (companies and institutions established for this purpose), in
implementation of the unified insurance law. Only representatives of these
entities who have obtained the necessary licenses from the FRA may conduct such
activities, given the specialized expertise required for reinsurance brokerage.
The new rules also prohibit combining insurance and reinsurance brokerage, or
practicing either activity without official licensing and registration with the
FRA.
For the first time, the decision allows independent
insurance brokers wishing to practice insurance brokerage through their own
offices to apply to the FRA for approval. The application must include the
office address, proof of tenure, contact details, and a statement of proposed
staff with their roles and responsibilities, along with a declaration that none
of them will engage in insurance brokerage activities. The FRA will decide on
the application within 10 days of receiving complete documentation. Existing
independent brokers operating through private offices are given one year to
comply with the new regulations.
Furthermore, insurance and reinsurance brokerage companies
are now required to convene a general assembly meeting at least once a year
within three months of the end of the company's fiscal year. The board of
directors may also call for a general assembly meeting whenever necessary.
Finally, independent insurance brokers are now obligated to maintain records of policies, commissions, claims, and cancellations, either in hard copy or electronically, as the FRA works to enhance its supervisory role and standardize obligations across all types of brokers in the insurance sector.