Govt tightens screws on insurers
Bame Piet | Thursday April 9, 2015 16:13
Presenting the Insurance Industry Bill before parliament this week, the Minister of Finance and Development Planning Kenneth Matambo said that the bill will protect insurance policy holders, insurance agents, regulatory issues and national interests.
He said that the Bill, which has 10 parts, would also insure that insurance companies are prepared for risks to cover shareholders’s dividends, and there will be strict supervision and monitoring by NBFIRA. Penalties will be put in place for those who contravene the law.
“The bill establishes the requirement that no person shall be entitled to carry on insurance business without being licensed by NBFIRA to do so.
“The bill caters for restrictions on business that an insurer may conduct. It provides for licensing requirements, validity of licence, licence conditions, variation, suspension and cancellation of licence,” the minister said.
He further said that the bill seeks to establish a structure that will guide insurance companies and that would be mandatory for the establishment of an audit committee within the insurance business.
The bill will also make it mandatory for insurance companies to furnish information to the regulatory authority, and also regulate shares and registration of shares and limitation of control of insurance business.
.“The bill establishes a requirement that the insurance business shall remain financially sound at all times and provides for overall assets of the insurance business; assets held in Botswana; kinds and spread of assets and liabilities,” he said.
Furthermore, the bill provides for regulatory action in the event of financial unsoundness of the insurer.
Under the bill, NBFIRA shall approve amalgamations and transfer of insurance business and that information of such transfers or amalgamations shall be published.
Matambo said that the bill seeks to give protection to policyholders.
“In this regard the bill has provisions for actual soundness of long term insurance policies, surrendering of long term insurance policies, insurance of minors, protection of policy holders’ benefits under certain long term policies and prohibition on inducement to enter into an insurance policy except for a reinsurance policy.”
The bill comes at a time when there are unconfirmed reports that foreigners operate about 90 percent of insurance agencies and brokers. Mmegi has information to the effect that the agencies, most of whom are doing business with Botswana Insurance Holdings Limited, have formed impenetrable cartels.
An insurance agent who preferred anonymity alleged that some of the companies issue false documents to the Labour Department claiming that they have employed locals when the truth is that they use names of their former employees in order to benefit from local businesses.
Further, the agent alleged that agents who do not possess the Certificate of Proficiency (CoP) are not protected, and that in some instances their employers deny them commission.
“In the event that you are paid such commission, the method of calculation is not shared with you. It is worse that there is nowhere you can take your complaints,” she said.
She added that many young Batswana who were employed as insurance agents are now sitting at home out of frustration at being disadvantaged in favour of friends and relatives of insurance agency operators.
Meanwhile, the minister said that the bill, which will be finalised in the July Parliament session will give guidelines for payment of commission to insurance agents, disclosure of commission, address unfair practices in the insurance business and compensation for persons who may suffer losses as a result of breaches of the Act.
The bill will also make it possible for policyholders to access their records.