Decision No. 394 of 1997 on Rules Governing Insurance Brokerage Practice, Broker Obligations, and Prohibited Acts

Decision No. 394 of 1997 Regarding the Rules Governing the Practice of Insurance Brokerage, Obligations of Brokers, and Prohibited Acts Chairman of the Egyptian Insurance Regulatory Authority

After reviewing Law No. 10 of 1981, promulgating the Law on Supervision and Regulation of Insurance in Egypt; And Decision No. 362 of 1996 of the Minister of Economy and International Cooperation, issuing the Executive Regulation of the Law on Supervision and Regulation of Insurance in Egypt; And the decision of the Board of Directors of the Egyptian Insurance Regulatory Authority in its session No. 97, held on 11/1997;

"DECIDED:"

Article (1): The provisions of the attached regulation regarding the rules governing the practice of insurance brokerage, obligations of brokers, and prohibited acts shall be applied.

Article (2): This Decision shall be published in the Egyptian Gazette and shall take effect from the day following its publication date.

Issued on 30/11/1997 Chairman of the Egyptian Insurance Regulatory Authority Abdel Hamid El-Seraag

Chapter One: General Provisions Article (1): The term "insurance broker" refers to any natural or legal person who intermediates, in any form, in insurance or reinsurance contracts on behalf of an insurance or reinsurance company in exchange for a salary, bonus, or commission.

Article (2): The insurance broker must be registered in the register maintained for this purpose by the Egyptian Insurance Regulatory Authority, in accordance with the provisions of Law No. 10 of 1981, promulgating the Law on Supervision and Regulation of Insurance in Egypt, and its Executive Regulation.

Article (3): The broker is obligated to conduct its activities in accordance with the rules and regulations governing the insurance market in Egypt, under the provisions of the aforementioned Law No. 10 of 1981 and its Executive Regulation, and while observing the provisions set forth in this Decision.

Article (4): Insurance brokers are prohibited from undertaking any acts involving a conflict of interest, including in particular the following: – It is prohibited for an insurance broker to be among the employees of the administrative apparatus of any insurance or reinsurance company registered in Egypt. (Amended by Decision No. 410 of the Chairman of the Authority dated 30/11/2009.) – It is prohibited for employees of insurance companies, excluding those in the production apparatus of such companies, from practicing insurance brokerage unless at least two years have passed since the termination of their employment for any reason. – It is prohibited for insurance brokers to work in the field of survey and damage assessment expertise. – It is prohibited for insurance brokers to work in the field of actuarial expertise.

Article (5): The broker is prohibited from issuing insurance policies, conducting surveys, or settling any claims, nor may they state in their documents or advertising and promotional materials anything contrary to the above.

Chapter Two: Broker's Obligations Towards Insurance Companies Article (6): The broker must preserve the name and reputation of the insurance companies, whether those on whose behalf they work or other competing companies. To this end, the broker must:

• Present insurance services with the required honesty and accuracy, and clarify to the client, upon request, the reasons for price differences among policy types suitable for their needs.
• Strive to understand clients' opinions regarding the types of insurance offered or requested, as well as the level of insurance service provided, and must inform the company of all feedback received from clients in this regard and work to resolve the causes of client complaints.
• Maintain the confidentiality of the company or companies on whose behalf they work.
• Refrain from submitting price quotes or discount commitments except through the specialized technical departments of the insurance company, and such quotes, commitments, and discounts must be prepared on documents bearing the company's name and approved by its authorized officials.
• Not use documents bearing the name of the company or companies on whose behalf they work in their private correspondence or in correspondence with clients, unless such documents have been officially issued to them by the relevant department of the company for this specific purpose.
• Not seek, directly or indirectly, to cancel a policy issued by the company on whose behalf they work if it was produced by another broker, for the purpose of renewing the policy. In case of violation, the new policy shall be considered when calculating their entitlements.
• Not make comparisons or conduct unfair criticism of any insurance company, policy, or coverage issued by them, unless done for the purpose of highlighting the distinct features of these policies or coverages.

Article (7): The broker is obligated to safeguard the deposits, documents, and funds belonging to the company on whose behalf they work. To this end, the broker must:

• Not accept any amounts or checks from clients for policy fees or premiums except upon receiving receipts approved by the company, which have been handed to them as personal deposits.
• Remit to the company immediately all amounts and checks belonging to it that they have received from clients.
• Return to the company any deposits and documents entrusted to them by the company immediately upon the expiration of the prescribed period for their possession or upon the termination of their relationship with the company.
• Remit to the company any commissions they have received from it in the event that banks refuse, for any reason, to pay the value of checks drawn against them to settle the value of insurance policy premiums from which these commissions were paid.

Article (8): When the company settles claims submitted by clients, the broker must verify that all amounts stated in these claims are genuine, that the attached documents are valid, and that they were submitted immediately after the occurrence of the insured event. If the broker suspects that the information in the claim request is questionable, or that the attached documents are invalid or incomplete, they must immediately inform the company to halt the claim settlement procedures.

Chapter Three: Broker's Obligations Towards Clients Article (9): The broker is obligated to provide the client with appropriate insurance services, whether before or after the issuance of the insurance policy, and must assist them in resolving any problems they may encounter, provided this does not conflict with the terms of the insurance contract.

Article (10): The broker must guide the client towards the insurance coverage that matches their needs and financial capabilities, and must adhere to the client's requests within the limits of what is legally permissible.

Article (11): The broker must explain to the client in detail how to answer the questions included in the insurance application, emphasizing that their answers to these questions are under the personal responsibility of the client. They must refrain from exerting any influence on the client when completing the insurance application and must alert them to the necessity of providing accurate data that may affect the company's decision to accept or reject the insurance application, and the consequences of violating this in the event the insured risk materializes. If the broker finds that the client has failed to provide some of the required information, they must direct them in writing to complete it.

Article (12): The broker is prohibited from making any erasures, deletions, modifications, corrections, or additions to the insurance application or to the policy issued by the insurance company, nor are they permitted to sign on behalf of the client.

Article (13): The broker must inform the client of the main points of the policy, particularly the following:

• The essential terms of the policy, especially those related to the period during which life insurance policies are subject to cancellation without refunding any amount to the client.
• The requirement that insurance must be for the actual value of the assets and the consequences of violating this in the event the insured risk materializes.
• The deductible percentage that the company may impose on the client.
• The scope of coverage, restrictions, and exclusions that the policy may contain.
• The requirement to pay the insurance premium on time, otherwise the policy will be subject to cancellation.
• The settlement value before the maturity date or the occurrence of the insured risk.

Article (14): The broker must inform the client, in the event that underwriting or risk bearing is shared among more than one company, of the names of the subscribing companies and the share of each, and must notify the client of any modifications that may occur in this regard.

Article (15): The broker must provide the client with a receipt approved by the insurance company for all amounts or checks received from them on account of the insurance premium, and must refund to the client any amounts due to them after deducting the value of this premium.

Article (16): The broker is obligated to safeguard all papers and documents submitted to them by the client, as well as the confidentiality of the information and data contained therein or disclosed to them by the client. They are not permitted to disclose this information or data to others, except for:

• Information and data that the broker has come across and are already known to others, or that the client has authorized them to disclose.
• Information and data that come to the broker's knowledge regarding the client and that the insurance company needs to know in order to make its decision regarding the acceptance or rejection of the insurance.
• Information and data that the broker discloses based on court permission or pursuant to a court order.

Article (17): The broker must notify the client in writing of the policy renewal date, renewal requirements, the required premium amount, the final payment deadline, and the necessity of disclosing any changes that have occurred during the previous period that may affect the company's decision to accept or reject the renewal request.

Article (18): In the event the insured risk materializes, the broker must alert the client to the necessity of providing accurate data regarding it and guide them to complete any information not included in the claim request. In the event of a conflict of interest between two clients (where the broker represents one as the injured party and the other as the liable party), they must be committed to representing the interests of each fairly.

Article (19): The broker must direct the client to seek the assistance of a specialized insurance consultant whenever the inquiries requested by the client exceed the broker's knowledge.

Chapter Four: Obligations of Reinsurance Brokers Article (20): The broker must assist the company in selecting reinsurers with strong financial positions and must continuously monitor the financial positions of the reinsurers to whom operations have been assigned, notifying the insurance companies of any risks that may threaten their financial standing.

Article (21): The broker must clarify to the ceding company the names of all reinsurers who underwrote the risk and the underwriting percentage of each.

Article (22): The broker must immediately notify the reinsurer of any warnings or expected serious losses that could affect their obligation to compensate for the assigned claims.

Article (23): The broker must transfer the premiums collected from ceding companies to reinsurers in different countries immediately upon collection.

Article (24): In the event the insured risk materializes, the broker shall collect the compensation value from reinsurers in different markets and transfer it to the ceding companies. If the insured risk is covered by more than one reinsurer and the compensation is transferred to the broker for settlement, they must provide the company, without prejudice to any agreed settlement period, with a statement of the collected amounts, collection dates, and balances under settlement, along with details of the company's remaining rights with each reinsurer.

Chapter Five: Investigation of Insurance Brokers Article (25): If the broker commits acts violating the provisions of the aforementioned Law No. 10 of 1981 or its Executive Regulation, or the rules set forth in this Decision, or commits acts involving fraud or gross negligence, or deviates from the duties entrusted to them, they shall be subject to disciplinary punishment after a written investigation, hearing their statements, and verifying their defense by the General Administration of Legal Affairs of the Egyptian Insurance Regulatory Authority. Upon request by the General Administration of Legal Affairs and with the approval of the Chairman of the Authority, the registration or renewal of registration procedures for the broker may be suspended until the investigation is concluded.

Article (26): The disciplinary penalties that may be imposed on the broker are:

• Warning
• Suspension from work for a period not exceeding one year.
• Striking off the brokers' register. The imposition of the aforementioned penalties shall not prejudice the civil or criminal liability of the broker for any violations committed.