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InsurTech is composed of the words “insurance” and “technology”. It is used as a collective term for the application of modern technologies in the domain of insurance services.
Digital and mobile brokers: FinTechs belonging to this category mostly act as digital insurance brokers and provide users with an overview of their insurance contracts with their respective conditions. Some FinTechs offer very short-term insurance contracts to cover specific cases which can be concluded often spontaneously via mobile devices. Oftentimes additional consulting services are offered.
Internet of things: FinTechs belonging to this category collect data by measuring for example the driving style of the customers or through wearables the customers wear to consult on, offer and/or manage the customer’s insurances.
Introduction
Attitude of the country towards InsurTech-services
The health insurance market is growing to become one of the most innovative in technology, helping people’s demands and the rise of diseases to withstand pressure on the costs for delivering care through innovative technology that ensures quality of services at lower prices. According to The Financial Regulatory Authority (FRA), the insurance industry is estimated to represent almost 0.91 % of Egypt’s GDP, which is considered to be one of the most important drivers of Egyptian economic growth. However, despite economic growth and high investment rate, the industry still faces a lot of challenges ranging from the diversification of its products to the difficulty in outreach. To meet those challenges, the industry inevitably must integrate technology to create sustainable innovative business solutions and help it grow.
Legal affairs
Obligations and requirements to provide InsurTech-services
The insurance sector is regulated in accordance with the Supervision and Control on Insurance in Egypt Law no 10 of year 1981 and its executive regulation. Also, InsurTech is regulated under the new law on Non-Banking FinTech No. 5/2022 which will be regulated under the umbrella of the FRA.
InsurTechs are subject to FRA’s supervision if they conduct insurance business. Conducting insurance business requires a license from FRA. The license cost shall not exceed 50,000 EGP.
The non-banking Fintech law highlights the main three (3) licensing requirements of companies operating in the field of non-banking financial services using financial technology. The requirements in particular are: (1) determining direct and indirect shareholding structure as well as related parties of the applicant (insurance brokerages amongst other non-banking sectors are in fact required to have 25 % of their direct shareholding structure owned by a Financial Institution), (2) the required technological infrastructure, facilities, information technology, and other security means are availed by the applicant, and (3) the company’s activity being limited to those specified in the license issued by the FRA. However, the FRA shall issue further regulations addressing such additional requirements pertaining to shareholding structure, board of directors’ composition, as well as conflict of interest regulations.
FRA is entitled to issue a temporary license not exceeding a period of two (2) years for innovative Start-ups in the non-banking FinTech sector. Further, FRA will still issue the decrees extrapolating on the required conditions for such a temporary license. FRA only mentioned the minimum issued capital for such Start-ups to be not less than EGP 250,000. In addition, FRA has mentioned explicitly that it will waive the licensing fees (capped at EGP 50,000) for such Start-ups.
Additional comments regarding the legal situation for InsurTech