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Insurance Industry - Provisions Governing Insurers Other Than Associations Of Underwriters Ss 1237

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            This Part shall apply only to insurers who are not associations of underwriters.

13.     Licensing of an insurer

            (1) Subject to the provisions of this Part, no person resident in Botswana shall commence or carry on insurance business unless he is licensed as an insurer under this Act.

            (2) An insurer resident in Botswana carrying on insurance business immediately before the commencement of this Act may, within three months after such commencement, make an application for a licence under this Act, and may, until the grant or refusal of its application, continue to carry on its insurance business.

14.     Exclusion of burial societies

            (1) The provisions of this Act shall not apply to burial societies, registered under the Societies Act.

            (2) Notwithstanding the provisions of subsection (1), section 119 of the Act shall apply to burial societies.

15.     ......

16.     Licensing requirements

            An insurer seeking a licence shall satisfy the Registrar that-

     (a)     it is a company registered under the Companies Act;

     (b)     it has a principal office in Botswana;

     (c)     its controller, manager, principal officer and directors who handle the day to day management of the company are all resident in Botswana; and that

     (d)     its controller, manager and principal officer are persons with sufficient business and insurance knowledge and experience.

16A.  Renewal of licence of an insurer

            (1) Every insurer shall, immediately after a period of 12 months has expired from his initial licensing, apply to the Registrar in such form as may be prescribed to renew such licence for a further period of 12 months.

            (2) An insurer shall thereafter apply to the Registrar to renew his licence whenever a period of 12 months has expired from his previous renewal of licence.

            (3) Where an insurer does not renew his licence when it expires, he shall pay, to the Registrar, a penalty of P150 per day during the period he does not renew his licence, which period shall not exceed three months.

            (4) Where an insurer does not renew his licence within three months of its expiry, the Registrar shall cancel that licence.

            (5) Where the licence of an insurer is cancelled, the insurer shall re-apply for a licence, which re-application shall be treated as a new application for a licence.

17.     Restriction on insurers whose officers are deemed unsuitable

            No insurer may employ as its manager, controller or principal officer any person who-

     (a)     has been adjudged an undischarged bankrupt in any country;

     (b)     has made an assignment to or arrangement or composition with creditors which has not been rescinded or set aside;

     (c)     has been convicted by any court in any country of an offence involving dishonesty; or

     (d)     is in the opinion of the Registrar an unfit person to hold the office.

18.     Grant of application

            (1) If the Registrar is satisfied that-

     (a)     the class or classes of insurance business in respect of which the application is made will be conducted in accordance with sound insurance principles;

     (b)     the relevant capital requirements for insurers are adequate, having regard to any regulations made in relation thereto under section 9, have been complied with by the applicant;

     (c)     the margin of solvency of the insurer is adequate having regard to any regulations made in relation thereto under section 10; and

     (d)     the applicant complies with the requirements of Parts III and IV of this Act,

the Registrar may grant the application for a licence as an insurer and issue the prescribed licensing certificate.

            (2) A notice of the grant under this section of every application shall be published in the Gazette.

19. - 22.           ......

23.     Retentions and reinsurances

            (1) The Registrar may by stipulating in writing to the insurer set limits within which a licensed insurer may accept insurances of all or any class by-

     (a)     restricting the gross premiums received by an insurer to a specified maximum in any one financial year; or

     (b)     restricting the gross premiums less gross reinsurances payable by an insurer to a specified maximum.

            (2) The Registrar may by stipulating in writing to an insurer prohibit a licensed insurer from transacting any individual policy or all insurance of a class or classes where-

     (a)     in the opinion of the Registrar the arrangements for reinsurance in respect of which persons, property or interests are, or are to be, insured by the insurer in the course of carrying on insurance business are not favourable to the economy or the insurance industry or are not in the public interest; or

     (b)     in the opinion of the Registrar the gross or net retention limits are too low or too high.

            (3) The Registrar, having regard to such matters as he considers relevant, may, by notice in writing to the insurer, exempt an insurer, subject to such terms and conditions and for such period as he specifies in the notice, from the requirements of this section.

24.     ......

25.     Preservation of records

            An insurer shall maintain all records or accurate transcriptions of all records relating to insurance transactions inside and outside Botswana undertaken by it, for a minimum period of six years-

     (a)     in the case of a life policy, after the maturity, cancellation, surrender or realisation of the policy or after the death of the insured;

     (b)     in all other cases after the maturity, cancellation or realisation of the policy or date of loss.

26.     Amendment of accounts, etc.

            (1) If, in the opinion of the Registrar, an account or balance sheet furnished by a licensed insurer under section 31 is incorrect or is not prepared as prescribed, the Registrar may, by notice in writing, call upon the insurer to amend such account or balance sheet, to furnish a correct account or balance sheet, or, as the case may be, an account or balance sheet prepared as prescribed under section 31.

            (2) If a licensed insurer fails to comply with a notice referred to in subsection (1) to the satisfaction of the Registrar, the Registrar may himself either amend the account or balance sheet giving the insurer particulars of the amendments, or he may reject the account or balance sheet.

            (3) An account or balance sheet amended by an insurer or the Registrar under this section shall be treated as if it had been originally submitted in its amended form.

27.     Audit of accounts of insurers

            (1) The accounts of every licensed insurer shall be audited annually by a resident auditor approved by the Registrar.

            (2) The form of an audit referred to in subsection (1) shall be in accordance with the requirements of the Companies Act and shall contain such other information or such additional declarations as the Minister may by regulations prescribe.

28.     Registrar's powers re commissions, deposit of funds and management expenses

            (1) The Registrar may, by notice in the Gazette, determine the minimum and maximum commission rates payable by insurers to other insurers, brokers or agents in respect of all or any class of insurance whether insurance or reinsurance.

            (2) The Registrar may, by notice in writing, require an insurer to deposit in the Bank of Botswana, within such time as the Registrar shall consider reasonable, such securities as the Registrar shall stipulate in the said requisition in respect of any or each class of insurance business being carried on by that insurer.

            (3) After consideration of the extent and duration of the business carried on by an insurer and the provision generally made for management expenses in the premium rates of insurers, the Registrar may-

     (a)     by notice published in the Gazette require insurers to limit their management expenses to an amount contained in the notice;

     (b)     by notice in writing to an insurer allow dispensation from the provisions of paragraph (a) to any other amount and for any period as the Registrar shall consider reasonable except that such period shall not exceed two consecutive years.

29.     Valuation of assets and liabilities

            (1) The Minister may make regulations with respect to the determination of the value of assets and the amount of liabilities in any case in which the value or amount is required by any provision of this Act to be determined in accordance with valuation regulations.

            (2) Without prejudice to the provisions of subsection (1), regulations made under this section may provide that, for any specified purpose, assets or liabilities of any specified class or description shall be left out of account or shall be taken into account only to a specified extent.

            (3) For the purposes of this section the Minister may make separate regulations for the determination of the value of assets and the amount of liabilities of general and long term insurers.

30.     Change of financial year

            The financial year of an insurer may be changed by the insurer with the approval of the Registrar.

31.     Annual returns to the Registrar

            (1) An insurer shall, within four months after the end of its financial year furnish to the Registrar in the prescribed forms-

     (a)     an audited balance sheet and profit and loss account;

     (b)     an audited income and expenditure statement for each category of insurance underwritten;

     (c)     an audited statement of solvency;

     (d)     an audited statement of all admissible and inadmissible assets; and

     (e)     all such other information as he may require.

            (2) The Registrar may, at his discretion, extend the time within which the insurer should comply with the provisions of subsection (1) by a maximum of three months:

            Provided that an insurer shall be liable to pay to the Registrar a penalty of P150 for every day during which it is in default beyond such extended time granted by the Registrar.

            (3) Where the insurer fails to furnish the required documents and information within the extended time or fails to pay the penalty, the insurer shall be regarded as having failed to comply with the provisions of subsection (1).

32.     Publication of authorised capital

            An insurer shall not publish or issue a document on which is printed a statement-

     (a)     of its authorised share capital, unless the statement also sets forth the amount of its subscribed capital and of its paid-up capital; or

     (b)     of its subscribed capital, unless the statement also sets forth the amount of its paid-up capital.

33.     Powers re restriction and instruction on insurers

            (1) The Minister may by regulations-

     (a)     prohibit an insurer from making investments of a specified class or description;

     (b)     require an insurer to realise the whole or part of a particular investment within a specified period;

     (c)     require an insurer or all insurers to invest such percentage of the insurance funds of such insurers or insurer, as the case may be, accruing in respect of their or its insurance business in Botswana or assets representing the Statutory Reserve Solvency Account in such Botswana securities and such other securities in Botswana, as may be specified.

            (2) An instrument made under subsection (1) may prescribe different percentages of such insurance funds to be so invested according to the class or description of an insurer, and may prescribe different percentages for local insurers.

            (3) Except with the prior express consent in writing of the Registrar, no insurer shall invest or otherwise lend insurance fund moneys outside Botswana.

            (4) An insurer may-

     (a)     borrow any money, whether secured or unsecured;

     (b)     guarantee or bind itself as surety for the discharge of any debt or obligation of any person or body of persons, or issue any bond, guarantee or undertaking provided it is licensed to carry on such guarantee business and the guarantee or undertaking is incorporated in a guarantee policy,

except that where it mortgages or charges assets-

      (i)     exceeding 20 per cent of the aggregate of its paid up share capital and Capital Reserve Account in the case of an insurer other than an insurer carrying on long term insurance business in order to secure for itself temporary loans or bank overdrafts; or

      (ii)     exceeding 25 per cent of the aggregate life insurance funds or four times the aggregate of its paid up share capital and Capital Reserve Account, whichever is less in the case of an insurer carrying on long term insurance business in order to secure loans for itself,

it shall notify the Registrar in writing within one month of so doing and shall provide the Registrar with such information as the Registrar may require relating thereto.

            (5) The Minister may, by statutory instrument, make an order enjoining the Registrar himself to take or require an insurer to take such action as appears to the Registrar appropriate to protect the policyholders of the insurer against the risk that the insurer may be unable to meet its liabilities, or in the case of an insurer transacting long term business, to fulfil the reasonable expectations of the policyholders.

34.     Trusteeship of assets

            (1) The Registrar may, at any time before or during the course of an investigation in terms of section 112, require an insurer to transfer all or a specified portion of its assets into a trust to be administered by a person nominated by the Registrar.

            (2) Except with the prior consent of the Registrar the assets subject to trusteeship in subsection (1) shall not be mortgaged, pledged or otherwise encumbered in any manner whatsoever in favour of any other person.

35.     Preferred creditors of an insurer

            Notwithstanding any law to the contrary, in the event of the liquidation, insolvency or bankruptcy of a licensed insurer-

     (a)     the owners of life policies and other classes of long term business issued by the insurer shall have preference against all other creditors of the insurer in respect of the life insurance and long term business funds maintained by it; and

     (b)     the owners of all other policies issued by the insurer shall rank before any other creditor of the insurer in the distribution of such assets of the insurer as remain after the claims, if any, by owners of life policies and other classes of long term business against the estate have been discharged.

36.     Insurers' code of practice

            (1) The Minister may by regulations set out a code of practice and a guide for insurers in the conduct of their business:

            Provided that an insurer may in the interest of prudent underwriting, and in specific cases, undertake practices discouraged by the code, but shall submit his reasons for so doing, in writing, to the Registrar as soon as practicable thereafter.

            (2) The principal officer of each insurer shall ensure that all directors, managers and employees of the insurer are made aware of, and comply with, the provisions of the code of practice described in subsection (1).

37.     Classification

            (1) For the purposes of this Act insurance business is divided into long term business and general business; and-

     (a)     "long term business" means insurance business of any of the classes specified in the First Schedule to this Act; and

     (b)     "general business" means insurance business of any of the classes specified in the Second Schedule to this Act.

            (2) For the purposes of this Act the effecting and carrying out of a contract whose principal object is within one class of insurance business, but which contains related and subsidiary provisions within another class or classes, shall be taken to constitute the carrying on of insurance business of the first mentioned class, and no other, if subsection (3) or (4) applies to the contract.

            (3) This subsection applies to a contract whose principal object is within any class of long term business but which contains subsidiary provisions within general business class 1 or 2 if the insurer is authorised to carry on long term business class 1.

            (4) This subsection applies to a contract whose principal object is within one of the classes of general business but which contains subsidiary provisions within another of those classes, not being general class 14 or 15.