Regulatory Alerts2017-01-01
Circular No. 6 of 2017 on Rules for Estimating Loss Rates to Calculate the Reverse Fluctuation Provision for Property and Liability Insurance Companies
The Egyptian Financial Supervisory Authority issued Circular No. 6 of 2017 to establish mandatory rules for property and liability insurers and their credit experts when estimating loss rates for calculating the reverse fluctuation provision. The directive requires companies to project target loss rates for at least one upcoming underwriting year, formally involve credit experts in pricing and business plan development, and submit detailed actuarial methodologies and supporting data electronically. It further mandates specific calculation parameters, including the use of credibility models for insufficient historical data, mandatory pricing soundness studies when expected loss rates exceed 100%, and transparent justification for any deviations from recent three-year underwriting experience averages.