Parliament has passed the insurance industry bill which seeks to modernize the regulation of the insurance industry which is currently under the Insurance Industry Act of 1987.
Presenting the bill for the second reading, Minister of Finance and Development Planning Kenneth Matambo said that Insurance Industry Act of 1987 has been surpassed by the developments in the insurance industry. Matambo said that its provisions are now inadequate and added that there are several supervisory gaps and it is irrelevant to today’s business environment and it is inflexible.
Regarding the new bill, Matambo reasoned that it seeks to address inadequacies and to provide clarity and transparency in the regulatory process. Supporting the bill, Assistant Minister of Education and Skills Development Moiseraela Goya commended the MFDP for coming up with the bill but raised some concerns with some sections of the new bill especially the punitive measures for noncompliance which he said were too small.
Gaborone Bonnington South Member of Parliament Ndaba Gaolathe acknowledged the good work done by Finance Ministry but called on Matambo to take into considerations which might be lacking in the new bill. He said that policy holders need more protection as most of them have limited financial knowledge and the products offered by the insurance companies. "We need an explicit mechanism of ensuring all the policy holders can verify or get a greater understanding of what they are getting into,” said Gaolathe.
Part IV of the bill clauses 28-40 emphasis on financial soundness requirement which states that, “the insurance business shall remain financially sound at all times; and provides for overall assets of the insurance business.”
Regarding that, Gaolathe said that there should be micro prudential framework and be done with coordination with Bank of Botswana. He called on government to deliberately enact a law that will ensure that Batswana participate in the insurance industry which he said is the future economic engine of growth. Gaolathe said foreign investors who want to venture into insurance sector should be required to give atleast 10% of their shareholding to citizens.
Part VII clauses 52-74 addresses general concerns among consumers that insurance companies swindle them of their hard earned cash. Assistant Minister of Local Government and Rural Development Botlogile Tshireletso feels a lot needs to be done. Debating the bill, Tshireletso said lack of education on insurance policies makes the industry an enemy of many.
Gaborone Central legislator Dr Phenyo Butale hailed the bill noting that it came at the right time but like Tshireletso believes a lot needs to be done to protect policy holders. Public awareness about the rights of policy holders is of paramount importance, said Butale.
Leader of Opposition Duma Boko took a swipe at the new bill saying it has not pointed out the supervisory gaps within the insurance industry which can call for the enactment of the new bill. He said Matambo was economical with the truth as he has failed to state what the mischiefs the bill is trying to address are. The Gaborone Bonnignton North legislator registered his fears that the new bill might lead to corruption as the regulating powers has been vested on one institution and questioned who will determine the calibration.
BIHL welcomes the bill
Botswana Insurance Holdings Limited (BIHL) one of the leading insurance companies in Botswana said the bill is a welcome development especially that it aligns with the best practice and international standards. “However on the other side of the spectrum, the local insurance market is not as developed as in other countries and the Bill may introduce stringent reforms that may impact the industry in some areas,” said BIHL Public Relations, Communications and Marketing Manager, Tebogo Keepetse.
Asked if it will address some of the concerns that they had as insurance industry with the insurance act of 1987, Keepetse answered in the affirmitive.“Among other things, the Insurance Industry Bill avails detailed process and duties relating to the insurance industry in one piece of legislation as opposed to IIA 1987,” she said.
The BIHL spokesperson noted that the IIA 2014 further provides for the business practices of insurance business and lays out the protection on the policy and policy holders. Keepetse concurred with some points raised by legislators that IIA2014 will protect policy holders.“It will definitely address some concerns, especially from the consumer perspective, for instance the policy holder protection provisions will enable clients to understand insurance better and to make much more informed decisions when signing up for policies, e.g. disclosure on policy costs and commissions.”