FRA tightens rules on insurers’ allocated funds to protect policyholders
Updated 2/8/2026 8:00:00 AM
Arab Finance: The Financial Regulatory Authority (FRA) has issued new amendments to the rules governing the investment of funds allocated to insurance and reinsurance companies, in order to further protect the rights of policyholders and beneficiaries, according to a statement.
The decision requires insurance and reinsurance companies to immediately cover any shortfall in allocated funds from their free funds.
If free funds are insufficient, the company must submit a plan to address the deficit within three months from the date the financial statements show the shortfall.
Under the previous rules, companies were granted a six-month grace period starting from the date they were notified by the FRA of insufficient allocated funds.
The new amendment both shortens this period to three months and changes its starting point to the date the deficit appears in the company’s financial statements, accelerating regulatory intervention to safeguard the rights of policyholders and beneficiaries.
Allocated funds are defined as the funds that insurance companies are required to set aside to meet their direct obligations to policyholders.
Free funds, by contrast, are not earmarked for direct obligations and represent the company’s financial buffer, including equity, retained earnings, or general reserves.
The amendment comes as insurance companies continue to comply with earlier regulatory measures.
In December 2024, the FRA required insurance and reinsurance companies to raise their capital to a minimum of EGP 600 million, prompting capital injections of around EGP 10 billion across the sector.
The authority also mandated that insurers invest between 2.5% and 20% of their paid-up capital in open-ended investment funds that invest in listed equities.
In 2025, insurance companies injected an additional EGP 2.6 billion into open-ended equity funds to meet these investment requirements, the FRA said.
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