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Finance Authority revises insurance guidelines
The General Authority for Financial Control, chaired by Dr. Islam Azam, issued a comprehensive decision to update the regulations governing underwriting and pricing in credit and guarantee insurance policies. The goal is to develop risk management policies and strengthen financial stability within the sector. The decision stipulates that insurance companies must ensure policyholders or the credit providers have a participation rate of no less than 25% of the current balance. It also prohibits modifications to coverage or reductions in deductibles unless authorized by the authority. Additionally, the decision emphasizes the need to establish written underwriting policies, adopt a technical methodology, and conduct precise creditworthiness evaluations based on reliable indicators. Companies are required to perform regular assessments of pricing models to ensure their adequacy. The regulation mandates conducting stress tests and scenario analyses biannually, minimizing concentration risks through strict internal limits, and complying with appropriate reinsurance standards. The aim of this decision is to enhance market efficiency and enable more effective risk management. It applies to new and renewed policies issued six months after its publication, with companies required to align their procedures with these new controls within that period.
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