7 rules determine the investment of insurance company funds

The Egyptian Insurance Association defined the technical rules for investing insurance companies' funds, referring to the interaction of insurance with possible future risks, which consists in paying the insurance amounts and compensations, and therefore having a certain amount of funds available in the form of allocations until they are needed to fulfill the various obligations on their due dates.

These funds have become an important source of investment for companies, which obligates insurance companies to adopt a good investment policy for investing these funds, which achieves the best returns with the least risk and in a manner consistent with the basic principles of investing in insurance companies.

The Union explained the concept of the technical rules for the investment of insurance companies' funds, which represented the set of rules that regulate the investment activity of the companies' funds from a technical point of view, the most important of which came in:

1- The principle of guaranteeing the invested funds: insurance companies are prohibited from investing their funds in high-risk investments, because the majority of them represent the policyholders' funds, and it is not permissible to speculate on these funds.

2- The principle of liquidity: which is the ability of insurance companies to convert the various investments into cash at a specific time without losses so that they can fulfill their obligations on their due dates.

3- The principle of achieving the appropriate and regular investment rate: It means the ability of the funds invested in the various investments to achieve a suitable investment return for the insurance companies.

4-The principle of diversification, which is not focusing on investing in a certain type of investment so that the insurance company's investments are not at risk.

5- The principle of stability: It means the relative stability of the structure of the investment portfolio of the insurance companies' funds and the lack of sudden, rapid or large changes to this structure.

The insurance association believed that investment is of utmost importance as the basis for ensuring that companies continue their business successfully and achieve the goals they seek, and it considers determining the investment policy and the rules governing investment the main factor to reach that goal.