Electronic Distribution of policies by Telecom Companies and E-Commerce Stores
Africa Focus
Yasmeen QotbiAssociate,Corporate Structuring
In view of the growing role of e-commerce in online marketing of goods and services and promoting levels of insurance inclusion using technological applications, the Financial Regulatory Authority (“FRA”) has issued two decisions allowing for the issuance and distribution of insurance policies -in general- and micro-insurance policies -in particular- electronically by telecom companies and e-commerce stores ("New Decisions").
The FRA Board of Directors Decision No. 189 for the year 2023 amending Decision No. 122 for the year 2015 regarding the regulation of the issuance and distribution of some standard insurance policies electronically by insurance companies through information systems networks. As well as Decision No. 292 of 2023 amending FRA Decision No. 902 of 2022 regarding the definition of microinsurance and the executive regulations for issuing and distributing its policies electronically through information systems network.
The FRA has previously issued Decision No. 122 of 2015 on technological controls by authorizing insurance companies to issue some of their policies electronically and distribute them using the information systems network. This decision provides for the electronic issuance and distribution of standard insurance policies directly to the insurance company's customer or by several entities designated by the FRA exclusively for each type. These policies include compulsory liability policies arising from accidents of rapid transport vehicles (known as compulsory cars), travel insurance policies as well as temporary life insurance policies that do not require medical disclosure and micro-insurance policies.
To activate the electronic issuance mechanism, the FRA has approved payment of premiums of electronic distributed policies using the applicable electronic payment methods, including direct debits from a bank account or bank payment cards and other payment methods approved by the Central Bank of Egypt.
In 2016, the FRA has issued Decision No. 902, which put in place the executive regulations for issuing and distributing microinsurance policies electronically.
In 2016, the FRA has issued Decision No. 902, which put in place the executive regulations for issuing and distributing microinsurance policies electronically. The 2015 and 2016 decisions stated that companies wishing to rely on the new facilities must apply to the FRA for the accreditation of the marketing entities, provided that the application includes a form of contracts to be signed, how to protect data, as well as the periodic reporting of activity rates resulting from this type of marketing.
Decision No. 122 has been amended in a way that allows telecom companies and e-commerce stores to issue and distribute the above-mentioned insurance policies electronically. Thus, the entities allowed to market the insurance policies electronically are: 1) one of the licensed insurance brokerage companies, 2) one of the tourism and travel agencies or airlines licensed to operate from the competent authorities, 3) a telecommunications company or electronic shops licensed to operate from the competent authorities; or 4) other distribution channels authorized to carry out their activities by the competent authorities and specifically provided for by the executive controls of micro-insurance.
Additionally, Decision No. 902 has been amended to add telecom companies and e-commerce stores to the list of entities authorized (i.e. brokerage insurance entities, associations and private institutions that have a license to practice the activity of micro-insurance, banks registered with the Central Bank of Egypt, Nasser Social Bank and the Bank for Development and Agricultural Credit, and Egyptian post.) to issue and distribute micro-insurance policies electronically.
Finally, the decision identified e-shops/ e-commerce store as websites or online platforms on the information systems network that display and provide lists of goods and services offered and basic information on different products (goods and services), and provide an integrated set of processes, including distribution, marketing, sale and payment of different products in electronic form, and licensed by the relevant authorities.
Allowing insurance companies to contract with electronic stores enables their clients to insure the products purchased, as well as with telecommunications companies to market and distribute typical electronic insurance and micro-insurance policies. This in fact shall facilitate the process of underwriting insurance policies to increase the protection of customers against the countless risks, thereby contributing to the preservation of the insured person's capabilities.
The application of the New Decisions shall result in expanding the base of entities allowed to market insurance policies, simplifying access to numerous insurance products, boosting the performance of the non-banking financial sector in its totality primarily via digitalizing services rendered by the insurance sector which will undoubtedly lead to upsurging levels of financial inclusion.
For further information, please contact Ayman Nour or Yasmeen Qotbi.
Published in August 2023
