Financial Regulatory Authority

Decision No. 902 of 2016

Dated 2/11/2016

Concerning the Definition of Microinsurance and the Executive Regulations for the Electronic Issuance and Distribution of Its Policies Through Information Systems Networks

The Chairman of the Financial Regulatory Authority

Having reviewed Law No. 10 of 1981 issuing the Law on Supervision and Control of Insurance in Egypt and its amendments; Having reviewed Law No. 15 of 2004 concerning the regulation of electronic licensing in Egypt; Having reviewed Law No. 10 of 2009 concerning the regulation of supervision over non-Egyptian secrets and financial instruments; Having reviewed Law No. 141 of 2014 concerning the regulation of microfinance activities; Having reviewed the Statute of the Financial Regulatory Authority issued by Presidential Decree No. 197 of 2009; Having reviewed the Authority's Board of Directors Decision No. 122 of 2015 concerning the regulation of insurance companies issuing and distributing certain active insurance policies electronically through information systems networks, amended by Decision No. 121 of 2016; Having reviewed the Authority Chairman's Decision No. 729 of 2016 concerning technological controls and information security rules related to insurance companies issuing and distributing certain active insurance policies electronically through information systems networks; Having reviewed the Authority Chairman's Decision No. 730 of 2016 concerning the executive regulations for active insurance policies that can be issued and distributed electronically through information systems networks;

Decided:

(Article One)
Definition of Microinsurance
Microinsurance shall be considered any insurance service targeting low-income individuals in the fields of property and personal insurance against risks to which they are exposed, in exchange for paying premiums commensurate with the nature of the insured risk, in the branches specified in Article Two of this Decision, and in all cases, the policy value shall not exceed one hundred thousand Egyptian pounds.

(Article Two)
Branches of Microinsurance
First – Microinsurance policies – Personal, in the following branches:
(a) Life insurance of all types.
(b) Personal accident and medical insurance on a short-term basis.
Second – Microinsurance policies – Property and accessories, in all branches except:
(a) Insurance on aircraft bodies, their machinery, equipment, and related accessories.
(b) Petroleum insurance.
(c) Motor vehicle insurance and related accessories (excluding vehicles for microfinance projects, youth entrepreneurs, and similar ones, provided they do not exceed the maximum limit of a microinsurance policy). (d) Insurance against land, river, sea, and air transport risks and related accessories. (e) Insurance on ship bodies, their machinery, equipment, and related accessories (excluding fishing vessels, provided they do not exceed the maximum limit of a microinsurance policy).

(Article Three)
Conditions and Requirements for Approving Microinsurance Policies First – The "File & Use" system shall be followed for approving microinsurance policies with the Authority, and upon finalizing their types, they shall be approved once by the Authority for each type, with an actuarial report attached to the approval documents detailing the technical bases used in calculating policy prices. If the policy is of one of the personal insurance types, the microinsurance policy must include the following data:

• Policy number, to be stated on all documents related to the policy.
• Name and postal addresses of the insured.
• Type and description of coverage and its limits.
• Coverage period.
• Special conditions and exclusions (to the maximum extent possible and consistent with recognized insurance principles).
• Documents required in case of a claim.
• The effect resulting from policy cancellation by either party to the insurance.
• Insurance premium, installment plans, and commissions paid for the policy.
• Provision on the time period for notifying the insurance company of the occurrence of the risk, which shall exceed two weeks from the date of the risk occurrence.
• Provision on the time period during which the company commits to settling the claim, which shall not exceed 10 working days from the date of receiving the required documents.
• Provision on the entity through which compensation is paid.
• Notice condition or condition precedent, shall be determined according to the nature of each insurance type, and the insured shall be granted a grace period commensurate with their ability to communicate with distribution entities or collect premiums.
• It shall be ensured that the policy wording is simple, avoiding difficult-to-understand terms, and simplified to the maximum extent.

(Article Four)
Electronic Issuance and Distribution of Microinsurance Policies Insurance companies shall obtain the Authority's approval to issue microinsurance policies electronically through the company's information systems and make the policy available for printing and distribution by one of the entities listed in Article Five of this Decision, and shall comply with the controls stipulated in this Decision and Decision No. 122 of 2015.

(Article Five)
Entities Authorized to Electronically Issue and Distribute Microinsurance Policies and Contracting Conditions Microinsurance policies shall be issued and distributed electronically through information systems networks by one of the following entities:
(a) Corporate brokers.
(b) Companies licensed to conduct microfinance activities under the provisions of Law No. 141 of 2014.
(c) Associations and civil society organizations licensed to conduct microinsurance activities under the provisions of Law No. 141 of 2014 (Categories "A" and "B").
(d) Banks registered with the Central Bank of Egypt after obtaining approval.
(e) Social Insurance Bank and Agricultural Credit and Development Bank.
(f) Egyptian Post.
(g) Associations, civil society organizations, and other entities deemed appropriate by the Authority.

The Authority's prior approval is required for the agreement contract concluded between the insurance company and the distribution entity, and it must include the minimum conditions for the following basic data:

1. Contractual obligations of each party to the contract, including the levels of the contracted entity by the insurance company regarding premium collection, distribution, claim receipt, and compensation payment by the insured.
2. Liability of the contracting party for violations regarding the confidentiality of customer data and information.
3. Contract termination.
4. The contract must specify the financial burdens incumbent on the distribution entity according to each type of insurance policy.

(Article Six)
Electronically Issued and Distributed Microinsurance Policy In addition to the microinsurance policy data specified in Article Three, the following controls shall be adhered to in electronically issued and distributed microinsurance policies:

1. The insurance policy must stipulate that the coverage validity is linked to the payment of the first premium by the insured through issuing a debit instruction from their account or depositing the amount with the entity approved by the Authority to distribute electronically issued microinsurance policies from an insurance company.
2. The printed version of the policy, as well as the screens on the website for entering policy data and printing it, must clearly include a confirmation statement that the distribution entity is merely a marketing and distribution channel and is not responsible for the terms and conditions of the marketed insurance products nor for paying any compensation, and that liability rests solely with the contracted insurance company.
3. The printed version of the policy must clearly include the policy number, its print date and time, and the username of the person printing it.
4. The printed version of the policy, as well as the website screens for entering policy data and printing it, must clearly include sufficient information to contact the insurance company's call center for electronic microinsurance customer service, to respond to inquiries and receive complaints. Such data must include phone numbers and email addresses for contacting the aforementioned call center.
5. The policy must state that it does not require the signature of the insured. The insurance company shall take necessary measures to protect electronically issued insurance policies against forgery and alteration via printing (watermark – embossed logo, etc.), and a microinsurance policy shall not be issued electronically unless all conditions and controls governing this matter are fully met.

(Article Seven)
Controls for Dealing with Customers and Related Documents The insurance company shall establish specific procedures for receiving, reviewing, and concluding microinsurance customer claims within the period stipulated in Article Three of this Decision. The company must also maintain dedicated files for customer claims, categorizing them into paid compensation, compensation under settlement, and rejected compensation, with each file including the following:

1. A copy of the insurance policy.
2. The insured's claim.
3. Surveyor's report and damage assessment – if available – according to each company's view and any documents.
4. Necessity of proving the claim, and identifying the direct cause that ultimately led to the loss.
5. Latest premium payment receipt (or equivalent proof of last payment).
6. Actions taken by the company and the claim status as of the date.
   The company's right to subrogate and seek compensation for losses caused by third parties, in accordance with the principle of subrogation in rights.
   The claim settlement period must not exceed the period stipulated in the policy.

(Article Eight)
Periodic Reports
Insurance companies shall commit to submitting their data regarding microinsurance operations to the Financial Regulatory Authority periodically every quarter, within a period not exceeding forty-five days from the end of each period, and it must include:

1. Insurance branch.
2. Insurance coverage.
3. Type of insurance: individual / group in case of life insurance.
4. Number of policies (new – renewed).
5. Sum insured amounts.
6. Premiums (collected – pending collection).
7. Production status (direct – brokers, etc.).
8. Paid commissions.
9. Claims.

(Article Nine)
Training of Personnel on Electronic Issuance and Distribution of Microinsurance Policies The insurance company shall be responsible for training staff and customers concerned with electronic distribution entities on the mechanisms for dealing with microinsurance policies and related insured services, and providing them with necessary guidelines, thereby ensuring their rights, enhancing transparency and clarity, and increasing stakeholder awareness.

(Article Ten)
This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the day following its publication, and shall be communicated to the concerned departments for implementation.

Chairman of the Board
Sherif Samy