Key Benefits:
This Part shall apply only to insurers who are not associations of underwriters.
6. Insurer to be a resident company
No insurer may, after the coming into operation of this Act, be licensed as an insurer in Botswana unless it is incorporated as a company under the Companies Act and is deemed to be resident in Botswana.
7. Restrictions on general and long term insurers
(1) No individual insurer may transact both general and long term insurance business.
(2) Any insurer who carries on business in contravention of this provision will be liable to have his licence cancelled.
(3) An insurer transacting both general and long term insurance business immediately before the coming into operation of this Act shall be permitted to transact both general and long term insurance business for a period not exceeding one year from the date on which this Act comes into operation.
8. Separation of insurers and brokers
(1) No insurer shall register the transfer of more than five per cent of its shares to any person or body of persons directly or indirectly, wholly or partly owned or controlled by a Botswana licensed insurance broker or to any person or body of persons directly or indirectly by itself or through any nominee holding, at that time, any legal or equitable interest in any Botswana licensed broker or any person or body of persons associated with either.
(2) No insurer shall directly or indirectly acquire or hold any legal interest or any equitable interest in excess of five per cent in any Botswana licensed insurance broker or in any company or partnership directly or indirectly by itself or through any nominee holding, at that time, any legal or equitable interest in any Botswana licensed broker or in any company or partnership associated with any such broker.
(3) No Botswana licensed broker may permit any Botswana licensed insurer or person or body of persons directly or indirectly by itself or through any nominee holding, at that time, any legal or equitable interest in any Botswana licensed insurer, or any person or body of persons associated with either, to acquire or hold more than a five per cent interest in its business as a broker.
(4) No person, company or body of persons who has a legal or equitable interest in or is owned, controlled or employed by-
(a) any Botswana licensed insurance broker; or
(b) any Botswana licensed insurer,
may be employed as the manager, controller, director or principal officer of a Botswana licensed insurer or broker respectively, nor may a Botswana licensed insurer or broker enter into any management agreement with any such person, company or body of persons.
(5) Where at the coming into force of this Act an insurer or broker is in contravention of any of the provisions of subsections (1) to (4), such insurer or broker may, notwithstanding such contravention, be licensed under this Act for a period not exceeding two years.
(1) The Minister shall prescribe the minimum paid-up share capital to be maintained by a licensed insurer.
(2) For the purposes of subsection (1) the Minister may prescribe different amounts in respect of insurers transacting general business and insurers transacting long term business.
(3) Every insurer shall transfer from its net profits of each year, before any dividend is declared and after due provision has been made for taxation, a sum not less than 25 per cent in the case of an insurer transacting long term business or 15 per cent in the case of an insurer transacting general business-
(a) to the paid-up share capital of the insurer; or
(b) to a Capital Reserve Account which account may be reduced only for the purpose of increasing the paid-up share capital of the insurer:
Provided that an insurer shall not be required to transfer any part of its net profits if the aggregate of the paid-up capital and the Capital Reserve Account exceeds such sum as may be prescribed by the Minister:
Provided also that the Capital Reserve Account shall be wholly utilised not less frequently than every five years to increase the paid-up share capital of the insurer.
(4) Any licensed insurer who permits its paid-up share capital to be reduced to a level below that prescribed by the Minister or fails to increase capital in accordance with the requirements of subsection (3) shall be guilty of an offence and shall in addition to any other penalty prescribed by this Act be liable to have its licence cancelled.
(5) The Minister may by regulations prescribe the form in which paid-up share capital may be maintained by an insurer.
(1) No insurer may carry on business as an insurer unless it maintains in Botswana at all times while it so carries on insurance business a margin of solvency of not less than such amount as may be prescribed.
(2) Regulations may prescribe the method of calculating the assets and liabilities of an insurer for the purposes of this section.
(3) Any insurer acting in contravention of this section shall be guilty of an offence and shall in addition to any penalty prescribed by this Act be liable to have its licence cancelled.
11. Statutory Reserve Solvency Account
(1) Upon the coming into force of this Act every licensed Botswana insurer transacting general business shall commence and maintain a statutory fund (to be known as the "Statutory Reserve Solvency Account"), and shall, in every year, before any dividend is declared, transfer to such account a sum equivalent to 10 per cent of its gross profits:
Provided that, where the transfer of 10 per cent of its gross profits would result in the total sum in the account exceeding 25 per cent of the gross premiums received in the previous financial year, an insurer may transfer only so much as is necessary to raise the total sum in its account to a sum equivalent to 25 per cent of the gross premiums received in the previous financial year.
(2) The Statutory Reserve Solvency Account shall be kept distinct and separate from all other accounts in the books of account and other records of the insurer.
(3) The Statutory Reserve Solvency Account shall neither be reduced nor encumbered:
Provided that the Registrar may by notice in writing to the insurer specify circumstances in which it may be reduced or encumbered.
(4) No insurer shall at any time declare credit or pay any dividend or make any other transfer from profits other than a transfer to the Statutory Reserve Solvency Account until all encumbrances or reductions allowed by the Registrar under the provisions of subsection (3) have been removed.
