Regulatory Alerts2020-01-01
Circular No. 1 for the Year 2020
The Financial Regulatory Authority of Egypt issued Circular No. 1 for 2020 to explicitly prohibit insurance companies from issuing policies or endorsements with retroactive effect for periods where the insured risk has already expired. The directive mandates that such retroactive issuances are technically and legally invalid, and it formally warns company personnel to strictly refrain from engaging in this practice. Violations of this circular will trigger mandatory legal enforcement actions by the Authority under Law No. 10 of 1981 and its associated executive regulations and decisions.
The General Authority for Financial Regulation
FINANCIAL REGULATORY AUTHORITY
Vice Chairman of the Authority
Circular
No. (1) for the Year 2020
Regarding the Issuance of Insurance Policies or Endorsements with Retroactive Effect
In the context of the Authority's efforts to ensure the safety, stability, regulation, and development of non-banking financial markets, and to protect the rights of its counterparties, and in light of the Authority's observation of improper practices by certain insurance companies that could harm policyholders and beneficiaries, such as issuing policies for certain types of insurance with retroactive effect or issuing additional endorsements that apply retroactively to those policies, contrary to established legal and technical principles and practices.
Therefore, the Authority emphasizes that under no circumstances shall an insurance company issue insurance policies with retroactive effect for periods that have already expired, with the knowledge of the insurance company and the policyholder that the risk has ceased, as this renders the insurance invalid from both technical and legal perspectives.
Accordingly, relevant personnel within the company are hereby notified of the necessity to refrain from issuing any documents or endorsements of this type. Please be advised that in the event of a violation by the company, the Authority will be compelled to take legal action in this regard in accordance with the provisions of Law No. 10 of 1981, its executive regulations, and related regulatory decisions.
Vice Chairman of the Authority
Advisor / Rida Abdul Mu'ti
Dated: 4/7/2020
Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Telephone: +202 22545350
Fax: +202 35370036
WWW.FRA.GOV.EG
ARAB REPUBLIC OF EGYPT
FINANCIAL REGULATORY AUTHORITY
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