Al-Akhr: We strive to implement governance instructions to ensure fairness for small investors against the "big players" and to prevent conflicts of interest

Exclusive to "SadaNews": At the beginning of this year, it was supposed, according to previous statements by the Capital Market Authority, which oversees the insurance sector, that it would start implementing a new insurance law. This law is expected to bring about a comprehensive change in the operation of the insurance sector in Palestine. Among its provisions is the adoption of new mechanisms and standards for calculating insurance premiums, in addition to the establishment of a special committee for resolving disputes in compensation cases. So why has the law not been implemented, despite the Authority's repeated announcements that it was close to completion?

Amar Al-Akhr, the Chairman of the Board of the Authority, stated during a meeting with a number of journalists specializing in economic affairs, in response to a question from "SadaNews", that after the Authority finalized the preparation of the new law and concluded consultations with the relevant parties, the law was submitted to the Cabinet for discussion and approval. The Cabinet, in turn, requested the Authority to exercise caution and hold further discussions before its implementation.

He added, "The Cabinet is keen not to rush into approving any laws related to the lives of citizens due to concerns about potential negative impacts, especially during this difficult economic period." He noted that the Authority is keen to introduce a law that serves the interests of beneficiaries and companies alike while achieving the public interest. Therefore, the approval of the law requires more time for consultations and careful consideration before approval.

Al-Akhr stated that the Authority will conduct further consultations regarding the law, expecting it to be ready for approval and subsequently implementation in the second half of this year.

He indicated that the Authority will issue new instructions regarding the mechanisms for calculating insurance premiums, to be applied before the new insurance law is approved and implemented.

Al-Akhr pointed out that the instructions will take into account calculating the insurance premium based on the expected risk levels. As a result, the premium amount will vary between one insured person and another according to the driver’s history. He mentioned that the Authority has agreed with the Ministry of Transport and the General Police Department on an electronic system that will be open to insurance companies to access the driver's traffic history; based on this, the insurance premium will be calculated according to the points, number of accidents, and their severity, instead of relying solely on the type of vehicle and engine size as is currently done.

Regarding the concentration of insurance companies' activities in the vehicle market, which accounts for about 70% of the total insurance portfolio, Al-Akhr emphasized that the Authority is keen to enable insurance companies to improve their liquidity levels and increase their capital to enjoy high solvency capable of fulfilling their obligations in compensation cases. He noted that the Authority is working on addressing the financial indicators of several companies based on international accounting standards.

He confirmed that the Authority is working to link market share to companies’ financial indicators and their compliance with regulatory instructions and laws, indicating that the Authority will regulate the issuance of insurance policies from companies based on their compliance with liquidity and capital standards.

He noted that the Authority is committed to applying specialized licensing to some companies, as some, for example, have obtained licenses to provide agricultural insurance. He pointed out that the Authority's approach is to promote the diversification of insurance services and not to concentrate 70% on vehicle insurance; however, the small size of the Palestinian economy and the circumstances it is going through pose obstacles to implementing this.

On another front, Al-Akhr pointed out that the governance instructions announced by the Authority recently aim to create a transparent environment, noting that these instructions are mandatory for companies and not optional.

He emphasized that these instructions aim to protect the rights of small shareholders in companies from the exploitation of the "big players" and to prevent conflicts of interest. Therefore, a review of the definition of an independent member on boards of directors was undertaken, ensuring compliance with certain criteria that guarantee transparency and independence, including that they should not own more than 0.5% of the company's total shares.

Regarding the leasing sector, Al-Akhr mentioned that the Authority's efforts are directed towards directing this financing towards productive sectors and developing the energy sector, rather than solely focusing on vehicles.

Recently, the Board of Directors of the Capital Market Authority issued Corporate Governance Instructions for companies listed on the Palestine Stock Exchange No. (1) of 2025, in a strategic move aimed at updating the legal frameworks governing the non-banking financial sector, in line with the best international standards and practices, and enhancing a safe and transparent investment climate in Palestine.

Al-Akhr confirmed that issuing these instructions is in harmony with the new Companies Law and the rapid developments in corporate governance principles in recent years, explaining that these instructions will apply to all publicly-held companies listed on the Palestine Stock Exchange. They have been designed considering the uniqueness of the local market and the economic situation to ensure their practicability.

The governance instructions aim to establish a comprehensive legal framework for regulating the affairs of publicly-held companies, in line with the prevailing laws and regulations in Palestine, contributing to enhancing principles of trust, transparency, and accountability, improving the performance quality of boards of directors, increasing the competitiveness of companies and their market value, and enhancing the trust of stakeholders and investors.

It is worth noting that the Capital Market Authority oversees four sectors: insurance, securities, financial leasing, and mortgage financing.