NEW INSURANCE REGULATIONS RELATING TO MICRO INSURANCE COMPANIES
Newly incorporated insurance regulations, Statutory Instruments 39 and 40 of 2018, have been set out in the Government Gazette (the ‘Gazette’) on micro insurance companies. The regulations stipulate certain requirements with regard to capitalisation of these insurance firms, together with the fees required for registration and obtaining a licence. The additional amendments also include the rate of levy for micro insurance companies.
Statutory Instrument 39 of 2018
The regulations published in the Gazette on 23 March 2018 are cited as Insurance (Amendment) Regulations, 2018 and amends the Insurance Regulations of 1989, published in Statutory Instrument 49 of 1989, also referred to as principal regulations. The amendment regulations require that the minimum unencumbered capital for micro insurance companies will be US$300 thousand.
To enable the registration of micro insurance companies and application fee of US$200 is required, together with the registration fee of US$1 thousand. Micro insurance agents who are individuals are required to pay a licence fee of US$20 whereas micro insurance agents who are corporate agents are required to pay a licence fee of US$ 50.
Statutory Instrument 40 of 2018
The regulations are cited as Insurance and Pensions Commission (Levy) (Amendments) Regulations, 2018 and amends the Insurance and Pensions Commission (Levy) Regulations, published as Statutory Instrument 21 of 2016.
The rate of levy, as defined in terms of section 30 (1) of the Act for micro insurance companies have been stated to be as follows: a + bx, where
a= a fixed levy of US$300 per company per quarter
b= rate of 0,005
x=estimated net written permission for the quarter.
If a micro insurance company carries on any other insurance business the regulatory rates of levy will apply as per the stated calculations.
These amendments are in light of the recent developments of the insurance regulatory framework, which allows for financial inclusion and the provision of insurance services to low-income earners. These changes seek to enhance the corporate governance in the industry and regulating the registration and formalization of micro insurance companies. The risk to low income earners will be mitigated. A culture of transparency and accountability in the industry will be fostered, which affords the protection of the respective consumers. This is all being done in a move to promote the efficiency and effectiveness of this sector of the economy. This close in the regulatory gap dissuades unregistered providers and promotes good market conduct. The changes are also set to increase the country’s insurance penetration ratio.