Commencement of the Insurance Industry Act 2015 and Regulations
19th June, 2019
Press Release
Commencement of the Insurance Industry Act 2015 and Regulations
- Insurance Industry Act (2015) and Regulations now effective.
- Greater alignment of legal framework with the Authority’s Risk Based Supervisory regime.
- Enhanced policyholder protection.
- Increased accountability and transparency requirements for industry players.
Botswana: The Insurance Industry Act (2015) and its Regulations came into effect on 17th May 2019, repealing the Insurance Act (1987) and its regulations. The new Act which is the legal framework for the Insurance industry is primarily designed to bring greater synergy between the legal framework with the Authority’s Risk-Based Supervisory regime, enhance the protection of policyholders and foster greater transparency and accountability of industry players. The Regulations for the new Act are an implementation tool to the provisions already in the Act.
The insurance industry which is substantial in size, had gross written premiums of P5 billion in 2017 and just under 300 regulated entities and 2400 Representatives selling insurance business in 2018.
“The Authority regulates and supervises in line with international standards and best practice and the risk-based approach used is indeed international best practice. It is in this regard that the Authority deemed it essential to review the regulatory framework for the insurance industry to ensure its relevance to contemporary developments both in terms of opportunities and challenges in the industry both locally and internationally.” said Oaitse M. Ramasedi, Chief Executive Officer of NBFIRA.
The new Act seeks to strengthen the corporate governance of insurance industry players and therefore introduces more stringent accountability and transparency requirements including capital requirements, professional indemnity cover & security guarantee and premium payment requirements to insurer amongst others.
The protection of policyholders is strengthened through the Act’s enhanced disclosure requirements at inception of the insurance policies and continuously throughout the duration of the insurance contract. These requirements include disclosure to the prospective policyholder of commission and/or remuneration if the prospective policyholder enters into, varies or renews an insurance policy; and the freedom of choice for an individual to use their existing insurance policy or undertake a new policy in the event that it is required in order for them to access a loan. Safeguarding the confidentiality of policyholder information is underscored in the new Act, as is the fact that no insurance policy shall commence without the first premium being paid through any mode of payment satisfactory to the insurer before any policy benefits can be provided. The commencement of the Act has also operationalised the Authority’s Policyholder Protection Rules (PPR) which provide the rights of policyholders and obligations of insurance service providers.
The Authority has engaged the insurance industry and provided clarity on the application and implications of the Regulations to the Insurance Industry Act of 2015, as well as expounded on the transitional arrangements put in place to ensure their compliance to the new regulations. These include amongst others, requirements for the submission of audited returns by insurance agents, as well as the extension of the preservation of records.
“The Authority undertakes its mandate to foster amongst others the fairness, efficiency and orderliness of the Non-Bank Financial Institution’s (NBFI) sector, thus contributing toward the financial stability of the economy. It is in this light that the industry and the Authority are partners in ensuring the continued growth and development of the insurance industry in a manner that is compliant to the existing legal framework. I am confident that the new Act enables a conducive legislative environment for the further dynamic growth of the industry.” said Ramasedi.
The Insurance Industry Act (2015) and its Regulations (2019) are available on the www.nbfira.org.bw.
Notes to Editor
About the Non-Bank Financial Institutions Regulatory Authority (NBFIRA)
Promulgated by an Act of Parliament in 2006, the Authority began its operations in 2008 and since then has achieved significant regulatory and supervisory milestones that have enabled the NBFI sector to grow and operate in line with international standards and best practices. The Authority oversees the NBFI sector, which in 2017 had assets worth approximately P123 billion, accounting for 57% of total assets in the local financial system. In 2018, the sector comprised of 775 active entities. The Authority is governed by the NBFIRA Act (2016) which repealed the previous NBFIRA Act (2006).
For more information, please contact:
Boa M. Chombah
Head, Communications & International Affairs
Tel: +267 310 2595 / 368 6100
Email: bchombah@nbfira.org.bw
