The Financial Regulatory Authority’s (FRA) Board of Directors has approved a 12-month pause on new licences for insurance and reinsurance brokerage, according to FRA Chairperson Mohamed Omran.
The authority had instructed for its relevant departments to prepare a study on the conditions and controls regulating the work of these companies, with a view to their development.
In a statement on Monday, Omran said that the council’s decision was taken in light of the Egyptian insurance market study’s results. This includes the finding that there is an oversupply of companies licensed to engage in insurance brokerage activity compared to the market’s needs.
On the back of this, the study found little need to increase the number of companies operating in the field, adding that licensing new companies may only damage the industry. The situation may require and benefit from international expertise and input based on the experiences in leading insurance markets.
Omran added that, following the issue of Law No. 118 of 2008, the FRA allowed, for the first time, the practice of insurance brokerage in Egypt’s insurance market.
FRA authorised the first company to engage in insurance brokerage activity in February 2009. It continued to provide licences to engage in insurance brokerage activity for companies until the number of licensed and valid companies totalled 90. This included 81 insurance brokerage companies and nine brokerage reinsurance companies.
Omran said that the decision to stop granting any new licences was issued out of the authority’s responsibility to work on developing non-banking financial activities, including insurance activity.
This would happen through continuously monitoring the practices and activities of insurance brokerage companies in Egypt. It would also assess the experience of their establishment and licensing in the past 10 years.