Regulatory Alerts2014-01-01
Financial Regulatory Authority Board Decision No. (152) of 2014
The Financial Regulatory Authority (FRA) issued Board Decision No. 152 of 2014 to amend its previous brokerage rules by replacing Articles 13, 15, and 26 of the Insurance Brokerage Activity Rules. The amended provisions mandate strict supervisory controls, requiring brokerage firms to maintain detailed transaction records, submit audited financial statements and annual commission reports, and notify the regulator of any managerial or structural changes at least 15 days in advance. Additionally, the decision enforces stringent qualification criteria for managing directors and brokers, prohibits individual production registration under employee names, and establishes disciplinary measures including warnings, suspensions, and deregistration for non-compliance.
Board Secretariat
Board Decision
Financial Regulatory Authority
No. (152) of 2014 dated 3/11/2014
Regarding the amendment of Board Decision No. 23 dated 9/3/2014
Chairman of the Board of Directors of the Financial Regulatory Authority
Having reviewed the Law on Supervision and Regulation of Insurance in Egypt issued by Law No. 10 of 1981 and its executive regulations,
and the Law on Regulating Supervision over Non-Banking Financial Markets and Instruments issued by Law No. 10 of 2009,
and Presidential Decree No. 192 of 2009 issuing the Statute of the Financial Regulatory Authority,
and the Financial Regulatory Authority Board Decision No. 23 dated 9/3/2014,
and the approval of the Authority's Board of Directors in its meeting No. (19) held on 3/11/2014.
Decided
Article (1)
The provisions of Articles (13), (15), and (26) of the Rules Governing the Practice of Insurance Brokerage Activity attached to the aforementioned Board Decision No. 23 are hereby replaced with the following provisions:
Article No. (13)
Supervisory Controls for Auditing Brokers' Activities:
- The brokerage company shall maintain regular records of the transactions it intermediates and shall submit to the Authority within 45 days after the expiration of the three-month period from the end of the financial year the following:
a. Financial statements for insurance brokerage activities for the past financial year
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b. Accompanied by a report from one of the registered accountants and auditors.
b. Submission of an annual statement indicating the volume of intermediated transactions and the volume of commissions received.
- The broker shall submit the books, records, and all data and information requested by the Authority in accordance with the provisions of Law No. 10 of 1981 and its executive regulations:
Which are:
a. Annual reports on its activities.
b. The amount of commissions accrued to it from each company separately for the past financial year, and the amount of each company's premiums.
c. Names of the insurance companies it dealt with during the past financial year.
- The Managing Director or General Manager of the company shall notify the Authority of any modification or change to the basic data and documents at least 15 days prior to the modification or change.
And proposed, in particular:
a. Company name or trade name.
b. Company address and its branches.
c. Person responsible for actual management or Managing Director.
d. Notification of opening, suspending, or closing a company branch at least 15 days prior to the modification or change.
e. Notification to the Authority of the cessation of the company's activities. The company shall not liquidate its operations, file for bankruptcy, merge, or split except after obtaining the approval of the Authority's Board of Directors, following verification that the company has finally discharged its obligations in accordance with the terms and procedures specified by the Board of Directors in this regard.
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Article (15)
Controls Governing Those Managing Brokerage Companies:
The following controls must be met by the person responsible for actual management or the Managing Director:
a. Registration in the Authority's insurance brokers register, with the registration being valid.
b. Having practiced insurance brokerage activities for no less than (9) years, or worked as a general manager of an insurance company for no less than (5) years, or practiced technical insurance work with an entity related to the insurance or reinsurance industry for no less than (15) years.
c. The Managing Director or person responsible for actual management must not combine this position with any other executive position in an insurance or reinsurance company related to insurance.
b. The brokerage company shall ensure that everyone practicing brokerage activities through it is registered in the Authority's insurance brokers register.
c. None of the employees of brokerage companies, nor the Managing Director, person responsible for actual management, or its production apparatus, shall during their employment register or input any production operations under an individual production name with insurance or reinsurance companies, and it must always be under the name of the brokerage company they work for.
- Regarding reinsurance brokerage companies:
a. The person responsible for actual management or the Managing Director must have experience in practicing reinsurance activities with an insurance or reinsurance company, or worked with a reinsurance brokerage company for no less than (9) years, or worked as a general manager of an insurance company for no less than (5) years combined with practical experience in the reinsurance field, or practiced technical insurance work with an entity related to the insurance or reinsurance industry for no less than (15) years.
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b. The reinsurance brokerage company shall ensure that everyone practicing brokerage activities through it is registered in the Authority's reinsurance brokers register.
c. None of the employees of brokerage companies, nor the Managing Director, person responsible for actual management, or its production apparatus, shall during their employment register or input any production operations under an individual production name with insurance or reinsurance companies, and it must always be under the name of the brokerage company they work for.
d. The Managing Director or person responsible for actual management must not combine this position with any other executive position in an insurance or reinsurance company related to insurance.
Article (26)
In the event of a broker violating the rules stipulated in this Decision and its attachments, the Authority's Board of Directors may take any of the following measures:
- Warning
- Suspension from work for a period not exceeding one year.
- Removal from the brokers register, with no re-registration in the Authority's registers permitted except after a period of no less than one year and not exceeding three years.
Article (2)
This Decision shall be published on the Authority's website and in the Egyptian Gazette, and shall take effect from the date of its issuance. Competent authorities are tasked with its implementation.
Chairman of the Board of Directors
Sherif Samy