Press Release - Commencement of Insurance Industry Act 2015: Unpacking Policyholder Protection Rules
NBFIRA 1/9/6 – I (13) 9th July, 2019
Press Release
Commencement of Insurance Industry Act 2015: Unpacking Policyholder Protection Rules
- Insurance Industry Act (2015) commenced and Policyholder Protection Rules now effective.
- Enhanced Transparency and Good Business Conducted by regulated entities
- Improved Consumer Education and Empowerment.
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 made effective the commencement of the Authority’s Policyholder Protection Rules (PPR) which outline the rights of policyholders and obligations of insurance service providers.
The insurance industry is substantial in size and in 2018 had gross written premiums of P5.4 billion and its assets of P19 billion accounted for 16% of the Non-Bank Financial Institutions (NBFI) sectors total assets. Within the same year, the insurance industry consisted of just under 250 regulated entities and 2300 representatives selling insurance business.
“In demonstration of The Authority’s commitment to consumer protection and empowerment, the Authority is proud to announce the commencement of the Policyholder Protection Rules (PPRs), which is the first Insurance Administrative Rule to solely focus on the rights of policyholders and foster greater transparency and accountability of industry players within the insurance industry.” said Oaitse M. Ramasedi, Chief Executive Officer of NBFIRA.
Mr. Ramasedi indicated that the Authority regulates and supervises the NBFI sector with the principal objective of fostering amongst other things: Fairness, Efficiency and Orderliness; Highest standards of business conduct and Financial Stability.
Objectives of Policyholder Protection Rules are to strengthen Consumer Protection by ensuring several critical elements being transparency, good business conduct and consumer education.
Despite the Authority’s mandate of regulating and supervising entities within the NBFI sector, its direct responsibility and contribution in safeguarding and enhancing consumer protection has been less understood but nevertheless, as equally critical as its regulatory obligations. The development of the Policyholder Protection Rules was necessitated by the Authority’s observation that consumers had limited understanding of their rights as well as the obligations of service providers when it came to accessing products and services within the insurance industry.
“The Authority strives for higher levels of financial literacy about services and products within the Insurance industry and will continue to improve its public education efforts to this end. The protection of policyholders is strengthened through the new Insurance Industry Act’s enhanced disclosure requirements at inception of the insurance policies and continuously throughout the duration of the insurance contract. The PPRs primarily introduce an array of information disclosure requirements largely on the part of the service providers. There are however some disclosure requirements on the part of the prospective or existing policyholders.” Added Ramasedi.
In his remarks, Ramasedi elaborated on five (5) key disclosure requirements contained within the Policyholder Protection Rules, these being:
a) Policy Holder Contract Disclosures;
b) General Format of Policies;
c) Signing of Blank or Uncompleted Forms;
d) Misrepresentation and Failure to disclose Material Information; and
e) Breach of Administrative Rules.
Mr. Ramasedi also strongly encouraged the public to comply with the Know Your Custom (KYC) requirements by regulated entities not only in the Insurance industry but also in the other industries within the NBFI sector. He emphasised that these requirements are in the broader sense part of the industry’s consumer protection criterion. In his concluding remarks, he reiterated the Authority’s commitment to contributing toward the financial stability of the country, of which consumer protection is a critical component.
The Insurance Industry Act (2015), its Regulations (2019) and the Policyholder Protection Rules (PPRs) 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 2018 had assets worth approximately P120 billion, accounting for 55% of total assets in the local financial system. In that year, the sector comprised of just under 800 incorporated active entities and had a gross income of P17 billion. 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
