The Financial Regulatory Authority (FRA) has issued a decision to establish a pool under the auspices of the Egyptian Association for Travel Insurance to take over the management of the travel insurance branch for holders of passports issued by the Ministry of Interior.
The association will issue and manage travel insurance policies approved by the FRA, in electronic form, and collect premiums and fees due, reported Amwal Alghad.
The association will have an administrative committee elected by the general assembly. It will consist of seven members representing insurance companies and cooperative insurance societies, provided that the representatives are the heads of the boards of directors of companies and associations, their deputies, designated members, or executives in high management positions in these insurers and associations. The Administrative Committee selects from among its members a president.
The association will have a coordination committee, which includes the head of the administrative committee of the association and a representative each of the Ministry of Interior (Passports and Immigration Authority), the FRA and the Insurance Federation of Egypt. This committee will examine issues that require coordination among stakeholders and any matter related to the work of the pool.
The articles of association of the new body stipulate, among other things:
The premium for a travel insurance policy is set at EGP300 ($19). The pool may review the premium periodically based on technical and actuarial studies.
25% of the net insurance premiums are to be set aside in reserves by the pool to meet compensation and other administrative expenses, after deducting 25% as collection expenses.
The pool can enter into reinsurance agreements with companies that are approved by the FRA.
The pool has the right to enter into agreements with healthcare management companies (TPA) to provide assistance, services and follow-up compensation for policyholders when outside the country.
In the event that the pool’s business results in a surplus, the amount would be distributed to pool members in proportion to their share of the business after setting aside a part of it, to be determined by the pool’s general assembly, to meet any deficit.
The distribution of shares among pool members will be reviewed every two years.
The group’s general assembly will have the authority to review the basis for the distribution of shares among the members in light of changes that occur to its composition upon the joining or departure of any member.
The basis for the distribution of shares in the pool is determined according to the following formulation:
Relative weight is calculated for each company based on 90% of the average direct premiums for travel insurance policies for the last five financial years (June 2016 – June 2020) and 10% of shareholders’ equity for as of the end of the last fiscal year (30 June 2020).
The National Insurance Company will have a 5% share due to its efforts in this project.
The minimum quota for all companies licensed by the Authority to issue travel insurance policies is set at 2%.
The minimum quota for insurers that do not issue travel insurance is set at 1%.
The pool currently has 22 members, with Allianz holding the biggest share of 16.5% while 10 insurers are allocated the minimum 2% share.