Cairo, Egypt – – The Financial Regulatory Authority (FRA) of Egypt has issued a landmark decision mandating that all consumer finance companies operating within the country provide life and disability insurance coverage for their clients. The move, announced on , aims to bolster protections for borrowers and promote stability within the non-banking financial sector.
Under Board Decision No. 28 of 2026, consumer finance firms are now legally obligated to insure individuals who secure financing up to the age of 65 against both death and total permanent disability. Critically, the insurance payout will cover the full outstanding balance of the loan, effectively safeguarding borrowers’ families or estates from inheriting debt in the event of tragedy or debilitating injury. The FRA has indicated that coverage for individuals over 65 will be permitted, contingent upon agreement between the insurance provider and the consumer finance company.
The FRA’s decision addresses a previously unregulated area of the rapidly expanding consumer finance market in Egypt. The growth of these services, while offering increased access to credit for individuals and small businesses, has also raised concerns about potential vulnerabilities for borrowers. This new regulation seeks to mitigate those risks, aligning Egypt with international best practices in consumer financial protection.
A key component of the new rules is the requirement for life insurance and capital formation companies to adopt a standardized insurance contract template specifically designed for consumer finance clients. This unified contract will be exempt from standard service fees, streamlining the process and potentially reducing costs for both insurers, and borrowers. The FRA has granted a six-month grace period, until , for insurance companies and consumer finance firms to fully comply with the new regulations.
The standardized contract clarifies the roles of each party involved. Consumer finance companies will function as the policyholders, while life insurance companies will assume the role of the insurer. Coverage will be automatically extended to all clients listed in statements approved by the finance company, eliminating the need for individual underwriting procedures – a significant simplification of the insurance application process. This automatic acceptance is intended to ensure broad coverage and reduce administrative burdens.
The FRA has established a strict timeframe for claim settlements. In the event of a client’s death or total permanent disability, the insurance company is required to disburse the insured amount – representing the remaining loan balance – within a maximum of five working days of receiving the necessary documentation. This documentation includes a copy of the client’s national identification card, a death certificate (if applicable), or an accredited medical report confirming permanent disability, and a statement detailing the outstanding debt.
The definition of “total permanent disability” is clearly outlined in the contract, specifying that it must be a condition preventing the insured from engaging in any form of work for a continuous period of at least six months, with no expectation of medical improvement. Specifically covered incidents include total loss of sight and complete paralysis of both limbs. However, the contract explicitly excludes coverage for risks stemming from criminal activity committed by the beneficiary, exposure to nuclear radiation, or pre-existing HIV infections.
Dispute resolution is also addressed within the framework of the new regulations. The FRA has stipulated that economic courts will have jurisdiction over any disagreements arising from the implementation or interpretation of the contract’s provisions. The contract will be deemed invalid in cases where evidence of fraud or materially false statements is established, reinforcing the importance of transparency and honesty in the application process.
The move by the FRA reflects a broader trend towards strengthening financial regulation and consumer protection in Egypt. Recent amendments to investment regulations for insurance “Allocated Funds” – announced on – demonstrate the authority’s commitment to modernizing the financial landscape. The FRA’s actions are also occurring alongside significant economic reforms and a push to attract foreign investment, suggesting a desire to create a more stable and predictable business environment.
While the immediate impact will be felt by borrowers and financial institutions within Egypt, the FRA’s decision could have wider implications for the development of consumer finance markets across the region. By proactively addressing potential risks and establishing clear regulatory guidelines, Egypt is positioning itself as a leader in responsible financial innovation. The success of this initiative will likely be closely watched by other countries seeking to balance the benefits of increased access to credit with the need to protect vulnerable consumers.
