Financial Control Authority: Developing underwriting standards protects policyholders' rights and enhances the risk management efficiency of insurance companies
Cairo — Nadeh Imam
The General Authority for Financial Supervision (GAFS) has mandated life insurance companies to inquire about the credit status of applicants seeking to conclude insurance policies with values of 10 million Egyptian pounds or more, or their equivalent in foreign currencies. This measure is part of updating proper risk assessment methods prior to issuing policies, thereby enhancing decision-making efficiency and providing greater protection for policyholders.
This directive comes within the “Risk Management Standards for Underwriting Individual Life Insurance Operations,” issued by Chairman Decision No. 2036 of 2026, which was recently published in the Official Gazette. The decision grants companies three months to align their practices with its provisions, starting from its effective date on the 16th of the current month.
The decision updates the risk management standards previously outlined in a circular letter issued in 2024. It also requires companies to check applicants’ credit status through licensed credit information agencies if the client’s income, occupation, or job title is disproportionate to the insurance coverage amount or the committed premium payments. Additionally, such checks are mandatory in cases of suspicion regarding the legitimacy of the insurance request.
Furthermore, the decision obliges companies to verify the identity of the insurance applicant and the authenticity of submitted documents, obtain accurate data regarding their health and financial status, and establish internal policies and systems to monitor unusual patterns in insurance applications. It also requires analyzing cases of repeated insurance coverage for the same risks, which aids in the early detection of fraud attempts and enhances risk management efficiency.
The decision further requires companies to develop systems and policies to ensure that insurance policies, coverage amounts, and income levels are proportionate to averages derived from the company’s activities, according to the nature of the risk in the insured’s geographic region. It also mandates identifying cases of repeated coverage for the same risks and preparing comprehensive studies to verify the legitimacy of applications and reduce the likelihood of fraud and deception.
Quality of Risk Assessment
Dr. Islam Azzam, Chairman of the General Authority for Financial Supervision, stated that the quality of risk assessment is a fundamental cornerstone for the success of insurance activities. He emphasized that the underwriting standards set by the Authority play a crucial role in enhancing companies’ efficiency in proactively monitoring risks and curbing fraud and deception. These measures ultimately protect policyholders and ensure that insurance coverage is directed to rightful beneficiaries based on sound technical principles.
In this context, he clarified that the decision requires companies to report any instances of fraud and deception discovered during the underwriting of life insurance operations to the Authority immediately. The standards included in the decision must be incorporated into the underwriting policy that each company is required to establish in accordance with the legislative and regulatory framework of the insurance sector.
Dr. Azzam affirmed that the Authority continues its vigorous efforts to complete the series of regulatory decisions for the insurance sector, in light of the Unified Insurance Law No. 155 of 2024. These efforts aim to encourage companies to innovate, diversify products, and develop their underwriting policies, thereby making the sector more attractive and competitive, and strengthening its contribution to the prosperity of the national economy.
