The Financial Regulatory Authority (FRA) has directed that the cap on total annual direct premiums for insurance operations entered into by a property insurance company with its main shareholders and associated persons shall be 10% of the total annual direct premiums of the company.
Among other requirements, the FRA decision stipulates that in the event of competition between the shareholders of the property insurer, the percentage allocated in annual direct instalments will be according to the stake of each shareholder in the company's capital, reported Al Mal.
In addition, the FRA says that insurers are to submit to it a detailed statement every three months of insurance operations that are connected to shareholders and related persons, including policy number, type and amount of insurance, the value of direct premiums, and reinsurance arrangements for insurance transactions with shareholders and related parties.
Mr Reda Abdel Moaty, FRA vice chairman, previously told Al Mal that the decision to place a ceiling on insurance business with shareholders and related parties was for two reasons, namely:
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to avoid obtain exceptional conditions granted by the insurance company to shareholders and related parties, especially in compensation payment, in contravention of legal and technical rules.
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to ensure the expansion of the insurance company by bringing in new customers and to avoid over-dependence on shareholders and related parties.