Financial Regulatory Authority

Chairman of the Authority

Decision No. (75) for the Year 2019

Date: 2019/9/2

Regarding the Regulations for Determining Depreciation Rates for Motor Vehicle Insurance

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Chairman of the Financial Regulatory Authority

Having reviewed Law No. 10 of 1981 concerning supervision and regulation of insurance in Egypt and its executive regulations and amendments, and Law No. 10 of 2009 concerning the regulation of supervision over non-banking financial markets and instruments, and Presidential Decision No. 192 of 2009 issuing the Basic Statute of the Financial Regulatory Authority, and the minutes of the fourth meeting of 2019 of the General Automobile Committee of the Egyptian Insurance Union, dated 2019/5/19, and the memorandum from the Central Administration for Financial Product Approval, dated 2019/7/2, on this matter,

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Article 1

(Car Parts Subject to Depreciation Rates Upon Replacement)

Licensed insurance companies and syndicates are required, when processing motor vehicle insurance claims for replacing parts of vehicles involved in accidents, to apply depreciation rates to the following parts:

1. Mechanical parts: including the engine and all its components.

2. Electrical parts: including the following main items:

• a. Electrical lamps "equipped with xenon + LED".
• b. Electric mirrors.
• c. Electrical relays.
• d. Starter motor.
• e. Alternator.
• f. Fuses.
• g. Computer (ECU).

3. The chassis/frame: including the following main parts:

• a. Jacks/scissors.
• b. Bars.
• c. Struts/shock absorbers.
• d. Gearbox "transmission case".
• e. Knuckles.

4. Exhaust pipes: especially those equipped with environmental protection units or known as the [Exhaust Catalyst] unit.

5. Rubber parts: including seals or car tires.

6. Warping: found in some vehicles due to the vehicle's age or improper washing.

7. Yellowing: found in glass, lamps, or paint due to weather factors.

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Article 2

(Depreciation Rates)

Licensed insurance companies and syndicates are required to deduct depreciation rates from the repair estimates of vehicles involved in accidents, according to the following table:

Model Year	Depreciation Rate
First Year	2.5% (two and a half percent)
Second Year	5% (five percent)
Third Year	10% (ten percent)
Fourth Year	15% (fifteen percent)
Fifth Year and beyond	20% (twenty percent)
Tires and Batteries	25% (twenty-five percent) for the first year, with a maximum depreciation of two years capped at 50% (fifty percent)
In case of warping	50% (fifty percent) for the part with warping
Yellowing or discoloration of glass due to road effects	50% (fifty percent)

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Article 3

(Deduction Rate Related to Customers' Failure to Hand Over Replaced or Changed Spare Parts)

Insurance companies and syndicates subject to this decision may, when processing repair claims for vehicles involved in accidents, require their customers to hand over the damaged car parts - spare parts - when submitting those claims. In the event that these customers are unwilling to hand over the damaged parts or spare parts, these entities may calculate a deduction not exceeding 2.5% of the financial value of the replaced or changed spare parts.

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Article 4

(Transition/Compliance Period)

In accordance with the aforementioned regulations, licensed insurance companies and syndicates are required to amend their motor vehicle insurance policy forms to align with the regulations contained in this decision, within a period not exceeding six months from the date of issuance of this decision.

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Article 5

This decision shall be published in the Official Gazette and on the Authority's website, and shall take effect from the day following its publication date.

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Chairman of the Board of Directors
Financial Regulatory Authority

Dr. Mohamed Omran

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Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Telephone: +202 3754530
Fax: +202 35370066
WWW.FRA.GOV.EG

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