Egypt Financial Regulatory Authority mandates reinsurance policies and stress testing for insurers with a three month compliance deadline

The Egypt Financial Regulatory Authority has issued a board decision requiring insurance companies to meet new regulatory standards for reinsurance as part of the implementation of the Unified Insurance Law. The measure requires each insurer to adopt an integrated reinsurance policy and a reinsurance program aligned with its capital base and business volume, with the aim of strengthening risk transfer arrangements, financial solvency and governance. The new standards require insurers to document why they use reinsurance, the economic rationale for doing so, their risk appetite, portfolio diversification, exposure to reinsurer credit risk, target reinsurance markets, criteria for selecting reinsurers and any external intermediaries, and procedures for managing liquidity risk linked to reinsurance contracts. Companies must submit their reinsurance policy to the authority, report any amendments, and provide details of their reinsurance program within two months of its preparation or renewal. The decision also requires periodic risk reviews, stress testing and scenario analysis, contingency plans for reinsurer default or insolvency, clear contractual terms including insolvency provisions, and the provision of reinsurance agreements, data and statistics so the authority can monitor concentration and credit risks. Boards of directors are expected to oversee and periodically review reinsurance policies and programs, and companies must notify the authority of material amendments or significant deviations in implementation. Insurers have three months, until 18 September, to bring their arrangements into line and submit approved reinsurance policies to the authority.