Statement of Objects and Reasons of the Insurance Bill, 2014
GOVERNMENT NOTICE NO. 55 OF 2014
The Parliament of Lesotho Statement of Objects and Reasons of the Insurance Bill, 2014
(Circulated By Authority of the Honourable Minister of Finance
Leketekete Victor Ketso)
The object is to repeal and replace the Insurance Act of 1976 in order to provide for the consolidation, administration, supervision, regulation, control, protec- tion and development of insurance business in Lesotho, thus ensuring that the in- surance industry in Lesotho prudently meet the demands of the economy for risk management and stimulation of growth in the investment sector.
The Bill aligns the Commissioner of Insurance's regulatory and supervisory roles in accordance with the international standards and practice, in particular, the Core Principles of International Association of Insurance Supervisors (IAlS) of which Lesotho has been a member since 1999. The IAlS Core Principles were designed to provide the international financial community with a benchmark against which the efficiently and effectiveness of insurance supervisory regimes could be assessed. The Legal framework for the supervision of insurance busi- ness in Lesotho as contained in the Insurance Act of 1976 is out of date and as a result does not comply with most of the Core Principle of the IAlS.
The Bill grants the Commissioner of Insurance, as the regulator, with necessary powers and tools to enable the Commissioner to achieve effective regulation and supervision of the insurance sector.
The Bill further grants the Commissioner power to inspect without prior notice, premises, including systems and controls whether in Lesotho or elsewhere in re- spect of a licencee, former licencee, subsidiary, directors and employees of a li- cencee or former licencee. This improvement is a major protection tool for the public as it will improve prudential supervision of insurers and insurance inter- mediaries by the Commissioner. Additional provisions have been developed in the Bill to provide clearer treatment of dormant accounts and unclaimed mon- eys; the thrust of the improvement being to grant better protection to members of the public.
One of the lessons learned by regulators from the global financial crisis is that
there is heightened need to enhance corporate governance structures in insur- ance business. Through this Bill, the Commissioner has opportunity to make necessary regulatory changes to achieve desired governance improvements.