The Financial Regulatory Authority (FRA) has approved a 12-month moratorium on the issuance of new licences for insurance and reinsurance brokers, according to FRA chairperson Dr Mohamed Omran.
Dr Omran said that the decision was taken in light of a study on the Egyptian insurance market that found, among other things, an oversupply of companies licensed to engage in insurance brokerage relative to market needs, reported Daily News Egypt quoting a FRA statement.
The authority had instructed its relevant departments to study the conditions and controls regulating the work of insurance broking companies, with a view to promoting their development.
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.
Under a law enacted in 2008, the FRA allowed for the first time the conduct of insurance brokerage in Egypt’s insurance market. The financial regulator authorised the first company to engage in insurance brokerage activity in February 2009. Since then, it has approved 90 broking licences. This included 81 insurance brokerage companies and nine reinsurance brokerage companies.
Dr Omran said that the decision to suspend granting new licences was issued out of the regulator’s responsibility to develop non-banking financial activities, including insurance. This would happen through continuously monitoring the practices and activities of insurance broking companies in Egypt. This includes assessing the experience of their establishment and licensing in the past 10 years.
Source: Middle East Insurance Review