Region

Jurisdiction

Regulator

2017-01-01

Circular No. 4 for 2017 Regarding the Permissibility of Paying Insurance Broker Commissions in a Currency Other Than the Egyptian Pound for Policies Issued in Foreign Currencies

The Financial Regulatory Authority issued Circular No. 4 for 2017 to mandate that insurance brokers generally receive commissions in Egyptian Pounds, while permitting foreign currency payments as a strict exception for foreign currency policies. This exception requires the insurance contract to explicitly state that the foreign currency premium includes the broker's commission and mandates that all related transactions be processed through banks authorized to handle foreign currency. The directive aligns with Article 42 of the Central Bank Executive Regulations, which generally requires Egyptian Pound transactions but allows foreign currency dealings when contractually stipulated and routed through authorized banking channels.

Egypt

Financial Regulatory Authority Egypt

Circular No. (4) for the Year 2017

Regarding the Permissibility of Paying Insurance Broker Commissions in a Currency Other Than the Egyptian Pound for Policies Issued in Foreign Currencies.

Based on inquiries received by the Financial Regulatory Authority regarding the permissibility of paying insurance broker commissions in a currency other than the Egyptian Pound for policies issued in foreign currencies, and in reference to Article (42) of the Executive Regulations of the Central Bank and Banking System Law No. 88 of 2003, issued by Presidential Decree No. 101 of 2004, which stipulates that "transactions within Egypt for goods and services shall be conducted in Egyptian Pounds according to the following rules:

(1) ...................

(b) transactions in Egyptian Pounds do not contradict a provision in any contract of ............, or contradict a provision in any insurance contract that stipulates the payment of premiums and compensation claims in foreign currency, provided that such transactions are conducted through banks authorized to deal in foreign currency.

In light of the above, the Authority urges insurance companies to note that the general rule is that brokers receive their commissions in Egyptian Pounds. As an exception, insurance companies may pay the commission of a broker who intermediates in concluding a foreign currency insurance contract as stipulated in the executed contract, provided that the payment of the insurance premium and any compensation due thereunder – upon the occurrence of the insured risk – is made in the same foreign currency, subject to the following conditions:

The insurance contract must stipulate that the premium amount paid in foreign currency includes the broker's commission.
Transactions regarding the insurance premiums due for the policy – including the broker's commission – must be conducted through one of the banks authorized to deal in foreign currency.

Deputy Chairman of the Authority
Advisor / Rida Abdel Moeity
2017/12/24

Financial Regulatory Authority
Office of the Chairman of the Authority
47076