Insurance Act No. 18 of 1976

Year of Act: 
Number of Act: 
Date of promulgation: 
03 February 1977



“actuary”  means  a  person  having  prescribed  actuarial  qualifications  or  a

memberof aprofessionalactuarialsocietyorinstitutewhom theCommissioner on application approves;

“approved securities” means securities issued by the Government of Lesotho, guaranteedastoprincipalandinterestbyGovernment,orsuchothersecurities as the Commissioner may have approved for the purpose of this Act;

“auditor”means a person having prescribed qualificationsof an accountant or a memberofaprofessionalsocietywhom theCommissioneronapplication approves;


55 of the Act or person acting in that capacity;

“Company”  shall  have  the  meaning  assigned  to  it  in  section  2(1)  of  the

Companies Act 1967;

“co-operative  insurance  society”  means  a  society  registered  under  the  Co- operative  Societies  Proclamation  1948  for  the  purpose  of  carrying  on  the businessofinsuranceandbytheconstitutionofwhichonlyoriginalmemberson whose application the society is registered and all policyholders are members; “court”inrelationtoanyinsurancecompanymeanstheHighCourtofLesotho and,inrelationtoanyoffenceagainstthisAct,includesaSubordinateCourt having jurisdiction in respect of that offence;

“domesticinsurancecompany”meansan insurancecompany incorporatedunder theCompaniesAct1967orCo-operativeSocietiesProclamation1948orany law for the time being in force in Lesotho;

In this Act, unless the context otherwise requires –



operation ona day appointed by the Minister in the Gazette.


Short title

And Commence ment





To provide for the regulation and supervision of insurance


Enacted by the Assembly


ACT NO. 18  OF  1976

{Date of Assent 3/2/77}

{Date of Commencement see section1}








the laws of any country other than Lesotho;

“generalinsurancebusiness”meansfire,motor,marine,accident,employers liability insurance or anytype ofinsurance but excludes life insurance business; “industriallifeinsurancebusiness”meansthebusinessoflifeinsurancewhereby theinsurancecompanyassumesacontingentobligationdependentonhuman life,inanamountnotexceedingsuchsumasmaybeprescribed,inreturnfora premiumorthepromiseofapremiumpayableatintervalsnotexceedingone month,andwheretheinsurancecompanyhasexpresslyortacitlyundertakento sendapersontothepolicyholderathisresidenceorplaceofworktocollectthe premium;

“insurance agent” means a person authorized by an insurance company to solicit risksandcollectpremiumsonitsbehalfforwhichhereceivesoragreesto receiveapaymentbywayofcommissionorotherremunerationfrom the insurance company;

“insurancebroker”meansapersonwho,asanindependentcontractor and not as theagentofaninsurance,iscarrying onthebusinessofsolicitingornegotiating insurance for a commission or other compensation on behalf of the insured or prospective insured, other than himself;

“insurancebusiness”meanstheassumptionoftheobligationofaninsurance company in any class of insurance business and includes re-insurance business; “insurance company” means any person carrying on insurance business;

“insurer”meansaninsurancecompanywhichisregisteredundersection10of this Act for the purpose thereof, eitheras domestic insurer or foreign insurer; “Life  insurance  business”  includes  industrial  life  insurance  business  and ordinary  life  insurance  business  and  the  business  of  effecting  contracts  of insuranceuponhumanlivesincludinganycontractwherebythepaymentof moneyisassuredondeath(exceptpoliciesfordeathbyaccidentonly)orthe happeningofanycontingencydependentonhumanlifeorwhichissubjectto payment of premiums for a termdependent on human life and includes:

(a) thegrantingofdisabilityanddoubleortripleindemnityaccident benefits if so provided in the contracts of insurance;

(b)thegranting ofannuitiespayableoutofanyfundapplicablesolelyto the relief and maintenance or persons engaged or who have been engaged in any particular profession, trade or employmentor the dependents of such persons;

“lifeinsurancefund”  meansthefundto whichreceiptsofan insurancecompany inrespectof itslifeinsurancebusinessarecarried andfrom whichpaymentsand administrative expenses in respect ofthat business are made;

“motor  insurance  business”  means  the  business  of  effecting  contracts  of insuranceagainstlossof,ordamagetoorarisingoutoforinconnection with the use, of, motor  vehicle, including third party risks;

“ordinarylifeinsurancebusiness”means  thebusinessoflifeinsurancewhere theinsurerassumesnoresponsibilitytocollectthepremium from the policyholder;

























































three months after the commencement of this Act, commence or continue to carry on any class of insurancebusiness inLesotho unlesssuchcompanyhas beenregisteredasaninsurerunderthis Actandhasobtainedfrom the Commissioneracertificateof registration


(2) Inthecaseofaninsurancecompanywhichwascarryingonany class    of   insurance    business    in   Lesotho   at   or    before    the commencementof this Act,failureto obtain acertificateor registrationinaccordancewiththe requirementsofthisActshall notoperatetoinvalidateanycontractofinsuranceenteredintoby it before the commencement ofthisAct or three months thereafter.




(3) Anypersonwhocontravenestheprovisionsofsubsection(1)is guilty ofan offenceandliable on conviction toafineofone hundred Rand in respectof eachday on which the contravention continues.




4.    No person other than –

(a)acompany  incorporatedinLesotho as a public company either under the Companies Act of 1967 or under the law of any country; or

(b)asocietyregisteredinLesothoundertheCo-operative societies Proclamationof1948shallbeeligibleforregistrationasaninsurer for any class of insurance business in Lesotho








Registration OfInsurance Companies

























Persons Eligible as Insurers



the public, in Lesotho;

“policy”meansavalidinsurancecontractwhatevertheform,inwhichtherights and obligations of the parties to thecontract are expressed or created; “policyholder”meansthepersonwhoforthetimebeinghasthelegaltitletothe policy and includes any person to whoma policy is for the time being assigned; “principalofficer”meansinrespectofadomesticinsurancecompanythechief executive  officer,  whether  under  the  names  of  managing  director,  general manager,managerorunderanyothername,andmeansinrespectofaforeign insurancecompanytheprincipalrepresentativeinLesotho,whoisauthorizedto accept any notice to be served on the foreign insurance company.






as to  name




Classes of insurance business

















Requirement capital







5. No person shall be registered as an insurer under a name, which so closely resemblesthenameofanexistinginsureraswouldbelikely,intheopinionof the Commissioner, to mislead the public.


6.  (1)Theclassesofinsurancebusiness whichmaybetransactedbyaninsurer are –

(a)life insurance business; and

(b)general insurance business


7.(1)  Noinsurance  company(whichhasasharecapital)shallberegisteredas an insurer unless it has a paid-up capital of not less than –


(a)R50,000or10%  ofthepremiumincomeifitwishestotransactlife insurance business; or

(b)R100,000or20%ofthepremiumincomeifitwishestotransactany general insurance business


No insurance company which is limited by guarantee shall be registered as an insurer


8. No person who intendstocarryon insurance business in Lesotho shall be registeredunderthisActunlesshe hasaworkingcapitalprescribedbythe Commissioner.


9.   An  application  to  be  registered  as  an  insurer  shall  be  made  to  the

Commissioner in a prescribed formand shall be accompanied by: -


(a)acertifiedcopyofthememorandum andarticlesofassociationor,inthe case of a foreign insurance company, such similar documents relatingto its affairs;

(b) thenames,addressesandoccupationsofdirectorsoftheapplicant;and where the applicant is a foreign insurance company the nameand address oftheprincipalofficerinLesothoandthenameandaddressofone person  resident  in  Lesotho  who  is  authorized  to  accept  any  notice required to be served upon the applicant;

(c)the address of the place of business of the applicant;

(d) thenamesandaddressesofpersonsholdingfivepercentorahigher percentageoftheshare capitaloftheapplicant andthenumberofshares allotted to each such person’

(e)astatementoftheclassorclasses of insurance business intended to be transacted by the applicant;

(f) astatementdulycertifiedbyanauditorthattherelevantcapital requirement    specified    in    sections    7    and   8    prescribed    by    the Commissioner have been complied with by the applicant;




























as to working

as to share







policyformsofeachclassorsubclassofinsurancebusinesstobecarried out by the applicant;

(h)iftheapplicantintendstocarryoutlifeinsurancebusiness,astatement as to –

(i)         the basis of calculation of premium rates; (ii)        the calculation of non-forfeiture values;

(iii)       the method of distributing profits to policyholders and shareholders;

(i)  a statement showing particulars ofproposed reinsurance agreements; (j)  a statement as to the prospective administrative costs and commission;

(k)astatementshowingqualificationandexperienceininsurancebusiness of the executive officers of the applicant at his place of business in Lesotho; and




10.  (1)  Within  thirty  days  after  receiptof  the  application  or,  where  further information    has    been   required,    after   receipt    of   such   information,    the Commissionershalleithergrantthecertificateofregistrationorshallinform the applicant that he has refused to do so.


(2)Ifthe Commissioner is satisfiedthattheapplicant –




a)  fulfills the requirementsspecified inSection 9

b)  islikelytocarryoninsurancebusinessinaccordancewithsound insurance principles;

c)  has margin of solvency adequate in terms of section 45;

d)  guarantees  to  grant  appropriate  non-forfeiture  values  under  life insurance policies;

e)  doesnotcarryonorintendtocarryonsimultaneouslywithinsurance business any other business which is not insurance business;


of  the  Minister,  register  the  applicant  and  issue  a  certificate  of registration.


11  (1)  Everycertificateofregistrationgrantedundersection10shallremainin forceforaperiodofoneyearfromthedateofissueandmayberenewed upon application to the Commissioner upon payment of a prescribed registrationfee.


(2)      In  granting  a  certificate  of  registration  or  in  renewing  it,  the

Commissioner may impose conditions to be satisfied by the insurer.


(3)      In  refusing  to  issue  or  renew  a  certificate  of  registration  the Commissionershallfurnishtotheapplicantawrittenstatementof the reasons for his decision.


















Certificate of registration
























Renewalof registration


f)   haspaidthefeeprescribedforregistration,heshallwiththeapproval

(l)  other documents or statements as the Commissioner may require.



























































Keeping of




Keeping of foreign



(4)      The   Commissioner   shall   cause   the   registration   or   renewal   of registration of an insurer to be published in the Gazette.


(1)TheCommissionershallafterconsultationwiththeMinistercancel the registration of an insurer, if –




(a) theinsurerhasceasedtocarryoninsurancebusinessandhis liabilitiesin respectthereofhavebeensatisfied orareotherwise provided for;


(b)anyclaim upontheinsurerarisinginLesothounderanypolicyof insuranceremainsunpaidforonemonthafterfinaljudgementin a regular court of law;


(c)the margin of solvency as defined in section 45 is inadequate; (d)the insurer refuses to submit toexamination under section 44;

(e) afteranappropriateinquiry,thereisreasontobelievethatthe insurancebusiness is notbeingconductedinaccordancewithsound insurance principles;


(f)the   insurer   makes   default   in   complying   with,   or   acts   in contravention of any requirement ofthis Act or any regulations made thereunder;or


(g) theinsurerfailstoapplyforrenewalofregistrationwithinthree months after its expiry.


(2)The cancellation of the registration shall take effect immediately.




(3)If registrationiscancelledtheinsurer shallnot,afterthecancellation has taken effect, enter into any new contractsof insurance, but all rights and liabilitiesin respect of contracts of insurance, entered into byhim beforesuchcancellationtakeseffectshallcontinueasifthe cancellation had not taken place.


(4)IftheCommissionerissatisfiedthattheinsurerhascompliedwith the requirements (the non-compliance or contravention of which the insurer’s registrationwas cancelled)andif theinsurerhas compliedwith anyfurtherdirectionswhichmayhavebeengivenbytheCommissioner,



Cancellation Of Registration




















the Commissioner may renew the registration of the insurer.








13.Everyinsurershallkeepsuchrecords in Lesothoasarenecessaryto exhibit clearly and correctly the state of affairs and to explain the transactions and financial position of hisbusinessinLesotho.






(a)arecordofpoliciesissuedbyhim showinghisrightsandobligations there under;

(b) a  record  of  premiums  received  on  all  policies  relating  to  his transactions in Lesotho;

(c)a record of claims paid out and those still outstanding; (d)a record of other disbursements made in Lesotho; and

(e)arecordofallinvestmentsmadeanddocumentaryevidenceofhis assets and liabilities in Lesotho.


15.       (1)EveryinsurershallfurnishtheCommissionerwithfullparticularsas toanychange,withinaperiodofonemonthsuchchange,inrespectof the names and addresses of its directors and principal officers and the situationoftheplaceof   businessin accordancewithparagraphs(b),(c) and (d) of section 9.


(2)EveryinsurershallapplytotheCommissionerinwritingifheintendsto make any alteration in theregistration particulars,


(3)Anyalterationintheregistration particularsasmentionedinsub- section(2)shallnottakeeffectuntilandexceptinsofarasithas been approved  by the Commissioner.


(4)Where  the  alteration  in  the  registration  particulars  consists  in  the amendmentofanydocument,orinthereplacementofanydocumentby anewdocument,theinsurershallfurnishthe Commissionerwitha certified copy of the new document.


(5)Where  in  respect  of  life  insurance  business  the  alteration  in  the registrationparticularsconsistsintheintroductionofnewpolicyplans, or  policy  conditions  or  premium  rates  or  non-forfeiture  values,  the


forms  and  conditions  and  with  a  statement  as  to  the  calculation  of















Alteration in registration particulars












































Accounts and reserve funds to be separate


himin Lesotho, keep at his principal office in Lesotho –


















































and exhibitof policies











premiumrates and non-forfeiture values.




(6)In this section “registration particulars”  means documents, statements, policy  plans,  premium  rates  and  other  information  furnished  by  an insurertocomplywiththeprovisions of section9 or furnishedby the insurer in complying with this section.




16.       (1)Wheretheinsurercarriesonthebusinessofbothclassesofinsurance heshallkeepthemoneyandaccountsofallreceiptsin respectofeach class of insurance business separate.


(2)   Wheretheinsurercarrieson generalinsurancebusiness heshallmaintain an insurancefundinrespectofeachtypeofgeneralinsurancebusinesstransacted byhim.    Theinsurancefundshallrepresenttheliabilitiesinrespectofhis contracts of insuranceandshallconsistofthereserve of unexpired risk and the reserve estimated to provide for settlement of outstanding claims.


(3)  The  reserve  for  outstanding  claims  mentioned  in  sub-section  (2)  shall provideforthepaymentofalllossesorclaimsincurredonorpriortothe dateofstatement,whether  reported orunreported,whichareunpaidasof suchdateandforwhichtheinsureris liable.  Themethodofcalculatingthe reserve of unexpired risks, mentioned in sub-section (2), may be prescribed.




(4)Where  the  insurer  carries  on  life  insurance  business  all  receipts  due  in respectofsuchbusinessshallbecarriedtoandshallform afundtobecalled thelifeinsurancefund,theassetsofwhichshallbekeptfreefrom all encumbrances and distinct and separate fromall other assets of the insurer.




17.       Everyinsurer,inrespectofallinsurancebusinesstransactedbyhimin Lesotho,shall,attheexpirationof eachcalendaryear,preparewith reference to that year, in prescribed forms:


(a)a balance sheet;

(b)a profit and loss account;

(c)a  revenue  and  expenditure  account  for  each  class  of  insurance business.


18.       Everyinsurer,inrespectofthelifeinsurancebusinesstransactedbyhim inLesotho,shallattheexpirationofeach   calendaryearpreparewith referenceto thatyear, in theprescribedform,astatementandexhibitof the life insurance policies.


































Statement of accounts and balance




life insurance























Submission of annual


































Authentic- annual


19.       Except  as  otherwise  provided  in  this  Act  the  provisions  of  the Companies Act 1967 which relate to preparation and presenation of audit reports shall apply to an insurer registered under this Act.


20.       (1)Everyinsurershallinrespectoflifeinsurancebusinesstransactedby him inLesothoatleasltonceineverytwoyears,causeanactuarial valuationof the life insurance business carried on by him and cause a report of such actuarial valuation tobe made in the prescribed form.


(2)  Every  insurer  shall  report  any  major  change  of  the  financial conditions(includinga changein theassets and liabilitiesor theirvalues) totheCommissionerwithinthreemonthsafterthedateof theactuarial report prepared under sub-section (1) has been submitted.


(3)If the insurer proposes to change his actuary or auditor he shall Furnish the Commissioner and the actuary and auditor or both as the case may be with full written reasons of such change.


(4)Theactuaryshallatalltimeskeephimselfinformedofthefinancial condition of the insurer.


21.       (1)Thecertifiedauditaccounts,theannualstatementsoflifeinsurance policiesreferredtoinsection18,andtheactuarial  report referredtoin section20, shall be printed,and four copies thereof shall be furnished as annual statements to the Commissioner within three months from the end of the calendar year to which they refer.


(2)Theannualstatementofinvestmentof assetsreferredtoinsection33 shallbefurnishedinfourcopiesto theCommissioner withinthree months from the date ofstatement to which it relates.


(3) Everyforeigninsurershallwithinsixmonthsfromtheendofits financialyearforwardtotheCommissioneracertificatefrom the authorityadministering insurancelegislation inhiscountryof incorporationtotheeffectthatthe insurerhas compliedwiththe requirements of the law of that country during the year for which the accounts and returns are furnished.




(4)If   the   Commissioner    has   reason    to   believe    that   under    the circumstances it was difficultfor the insurer to furnish the annual statements under this section within the periods specified in subsections  (1),  (2)  and(3),  he  may  extend  such  period  up  to  a maximum period of a further three months.




action of








22.       Thecopiesofstatementstobefurnishedundersection21shallbesigned


1)  the chairman of the board of directors;

2)  the principal officer;

3)  the auditor who audited the company; and

4)  the actuary who made the valuation


23.(1) Every insurer shall furnish to the Commissioner a certified copy of every reportorstatementontheaffairs of theinsurerwhich issubmittedtohis shareholders or policyholders.

(5)Everyinsurershallsubmitthereportorstatementreferredtoinsubsection (1)withinfourteendaysofits submissiontotheshareholdersor policyholders, as the case may be.

(6) EverydomesticinsurershallfurnishtotheCommissioneracopyofthe minutesofeverygeneralmeetingwithin thirtydaysoftheholdingofthe meeting.


every  statement,  balance  sheet,revenue  account  and  valuation  report which he is required to submit to theinsurance authority of the country in which  the insurer is incorporated.


24.  (1)  A  consolidated  balance  sheet  and  account  as  approved  by  the

Commissioner under section 21 shall be open to inspection by the public.


(2) Any policyholder or shareholdermay procure fromthe Commissioner acopyofanysuchconsolidatedbalance sheet and accounts mentioned in sub-section (1) upon payment of a prescribed fee.


(3) Every insurer shall on application supply to his shareholders or policyholdersaprintedorcertifiedcopyoftheaccount,statements andreportsfurnishedbytheinsurertotheCommissionerunderthe




25.Noinsurershallgrantloansortemporaryadvanceseitheronhypothecation ofpropertyoronpersonalsecurity orotherwise (exceptloansonlifeinsurance policies issued by the insurer within their surrender values) to any director, manager, or officer of the insurer, or to any other company which is not a subsidiary company and in which any such persons as mentioned above hold the position of director, manager, officer or partner.

26.(1)Noinsureroranypersonactingonbehalfofsuchinsurershallallow, or continueaninsurancecontractinrespectofanykindofriskrelatingtolives payableoranyrebateonthepremiumshowninthepolicy,exceptsuchrebateas


Furnishing reports


















Inspection of documents and supply

of copies










Prohibition of loans








Prohibition of rebates












Restriction as to currency



Restriction on use ofthe



provisions of section 21.



by –




















Investment insurance






Investment general













assets invested


Assetstobe kept innameof insurer



Statement of assets invested







Verification of assets invested




to the penalties stipulated in section 58.


27. No insurer transacting life insurance business in Lesotho shall issue any life insurancepolicytoapersonresidentinLesothounlesssuchpolicyiseffectedin a currency that is legal tender in Lesotho at the time of the issue of such policy.


28.(1)Nopersonotherthananinsureror insurancebroker shallusetheword “insurance” or “assurance”, or their equivalents in any language, as part of his business name.

(4)Nopersonotherthananinsurershallusetheword“underwriter”, or its equivalent in any language, as part of his business name.






29.Everyinsurershall,inrespectofthelifeinsurancebusinesstransactedby himinLesothoinvest,andatalltimeskeepinvestedinLesothoinsuchmanner as may be prescribed, assets equivalent to not less than –


(a)the amount required to meet the liability undertaken by the insurer; and

(b)the amount required to meet the liability on account of matured claims under life insurance policies.


30.Every insurer shall, in respect of the general insurance business transacted by him inLesothoinvestinLesotho,insuchmannerasmaybeprescribed,assets equivalent to not less than the sumof –


(a)  forty  per  cent  of  the  gross  direct  premium  written  on  own  account  in

Lesotho; and

(b) theamountrequiredtomeettheliabilityonaccountofoutstandingand unsettled claims under general insurance policies, reduced by such amounts as may be recoverable under any reinsurance agreement.


31.Everyinsurershallmaintain arecordcontainingparticularsoftheassetsheld invested from time to time inaccordance with sections 29 and 30.


32.Theassetsinvestedinaccordancewith sections29and 30shallbekeptonly in the corporate name of the insurer.


33. Every insurer shall submit to the Commissioner, every year along with his returnsundersection21,astatementintheprescribedformasatthethirty-first









(2) Any person who contravenes sub-section (1) is guilty ofan offence and liable







dayofDecemberofthepreviousyear,theassetsheldinvestedinaccordance withsections29and30andallotherparticulars necessary to establish thatthe requirements of sections 29 and 30 have been complied with.


34. The Commissioner may at any time take such steps as he may consider necessaryfortheinspectionforverificationof theassetsinvestedincompliance withsections20and30forthepurposeof securingtheparticularsnecessaryto establishthattherequirementsofthesesectionshavebeencompliedwith.  Ifthe


Commissionerwithintwoweeksfrom receiptoftherequisitionheshallbe deemed to have failed tocomply with the requirements ofthis Act.





35.(1)  Aminorwhohasattainedtheageof18yearsmay,withouttheconsent ofhisguardian,effectalifepolicyuponhisownlifeandpaypremiumdue underthepolicywithmoneywhichhehas earnedorwithanyothermoneyathis disposal.




( 3) If any money becomes payable under such a policyto theperson who effectedit,whileheisaminor,theinsurerwhoisliableunderthepolicyshall pay that money to the minor himself, and the minor may deal with it as he thinks fit, without the consent of his guardian.


36. (1) A life policy effected by a person upon his own life, which he has insured foraperiodof3yearsor longershallnot,during  his lifetimebeliabletobe attachedinexecutionofajudgmentororder of a court of law, attheinstanceof hiscreditor,andshallnotform partofhisinsolventestate,exceptinsofarasthe total values of all such policies exceeds R5,000.

Providedthatifsuchapolicyhasbeenpledgedtheprovisionsofthis sub-sectionshallapplyonlytoso muchofthevalueofthatpolicyas exceeds the amount of the liability whose payment the pledge secures.


(2) For the purposes of sub-section (1) a policy which an insurer issued in exchange for or in consideration of the surrender of another policy under which thesurrendered insurer was previously liable, shall be deemed to have been effected on the date on which the surrendered policy was issued, if the insurer receivedno paymentin addition to thevalueofthesurrenderedpolicy,asa consideration for the new policy.













Life policies forMinors
















Policy upon ownlife: protection duringlife time


consent of his guardian cede, pledge or surrender the policy while he is a minor..

insurer  fails  to  comply  with  any  requisition  made  in  this  behalf  by  the



















Policy on ownlife:













Certain life excluded



community of protected creditors


due under a life policy to which the provisions of sub-section (1) or (2) apply, to theowner of thatpolicythoseprovisions shallapply mutatis mutandis tothat money or to the claims thereof or to any other asset into which the insured convertedthatmoneyoranypartthereof,ifitisclearlyprovedthatheinsured has  not  expended  that  money  (except  for  the  purpose  of  conveying  it  into anotherasset)orthatthesaidassetisstillinexistenceandthattheinsuredhas not disposedofit;


Provided that this sub-section shall not apply –

(a)toanymoneypaidundersuchalifepolicyonsurrenderofthepolicy,or to any other assets into which the insured converted any such money; and

(b)to any money paid to the insured under such a lifepolicy,or to any asset intowhich money,insofarasthatmoneyorthevalueof thatasset, together  with  all  other  moneys  paid  to  the  insured  under  such  life policies,andthevalueofallotherexistingassetsoftheinsuredinto which he converted any such money, and the value of all life policies mentionedin sub-section(1) or (2)ofwhichtheinsuredistheowner, exceeds R5,000.


37. A life policy, money or other asset protected under section 38 shall, to the extentofsuchprotection,notbeavailableonthedeathoftheownerofthe policy,moneyorotherassetforthepaymentof   hiscreditorsoragainstthe claimof –


(a)  hissurvivingspouse,whowasmarriedtohimincommunityofpropertyto theextentofonehalfof theprotectedportionofthepolicy,moneyorother assets; or

(b)his surviving spouse, or his parent, child, step child under hiswill; or

(c)   his  surviving  spouse  or  his  parent  or  child  by  right  of  succession  ab intestato.


38. (1) Subject to sub-section (2), if a woman has effected a life policy upon her ownlifeandhasthereaftermarried,herrightsandliabilitiesunderthatpolicy andanymoneywhichhasbeenpaidorhasaccruedtoher,duringhermarriage, inrespectofthatpolicy andanyotherassetintowhichsheconvertedanysuch money, shall be excluded from the community of property or of  profit and loss betweenherandherhusband,andfrom thecontrolofherhusbandoverher property,whichmayhaveresultedfromhermarriageorpostnuptialcontract with her husband and she may deal with that policy or any such money or other assetasifshewereunmarried,eventhoughanypremium paidunderthepolicy waspaidoutofmoneyswhichbelonged to her and her husband jointly or to her husband only.


(2) If the husband paid any such premiumand his liabilities (or the liabilities of bothspouses,iftheyaremarriedincommunityofproperty)continuously exceed thevalueofhisassets(ortheassetsofboth  spouses,iftheyweremarriedin



property and










communityofproperty)asfrom thetime ofthatpaymentuntilhisorthejoint estatewassequestratedasinsolvent,the wifeshallbeliabletopayintothe insolventestatetheamount ofeverysuchpremiuminsofarasitspayment created or increased suchan excess ofliabilities over assets.


(3)Awomanwhoismarriedincommunity of propertyor of profitandloss with her husband, or who is married withoutsuch community but whose property is underthecontrolofherhusband,maywithoutherhusband’sconsenteffecta lifepolicyuponherownlifeoruponthelifeofherhusbandandtheprovisions ofsub-section(1)and(2)shallapply mutatis mundadisinconnectionwiththe policyinquestion,oranymoneypaidoraccruing thereunderoranyotherasset into which any such money was converted:


Providedthatthehusbandofsuchwomanshallnotbeobliged(unlesshehas ownmoney,oroutofmoneybelongingtohimandhiswifejointly,oroutof


(4)Ifawomanmentionedinsub-section (1)or(2)or(3),haseffectedalife policy in termsof any of those sub-sections, and whilemarried,earns or makes any money without utilizing for the purpose any assets belonging to her husband jointly, or to her husband only, she may, without her husband’s consent, use that money for the purpose of paying any premiumdue under such policy.


39. A married man may cedeto his wife any life policy which he may have effectedinhisownfavour(whetherbeforeorduringhismarriage)uponhisor herownlife,ormayeffectalifepolicyinherfavourofanychildofhimand her,whetherbornortobeborn(orinfavourofherandsuchchild)uponhisor


shall apply in connection withthepolicyinquestion,oranymoneypaidor accruingthereunderoranyotherasset into whichany moneywasconverted subjecttoanyconditionsonwhichthesaidmanmayhave cededoreffectedthe policy.





40.       (1)TheCommissionermaybynoticeinwritingrequireanyinsurerto supply  him  with  any  document  or  information  in  relation  to  any  matter connected withtheinsurancebusinesscarried on by the insurer, and the insurer shallcomplywithsuchrequirementwithinsuchperiod,afterreceiptofthe




(2)  Any  information  supplied  under  this  section  shall  be  certified  by  the

















Husband may cede

life policy to hiswife or insure in her

















Power tocall for information











Inspection of documents, books etc.



Investigation regarding annual statements


notice, as may be prescribed therein.


money under his control which belongs to his wife.























Minimum valuation of







principalofficeror,inthecaseofaforeigninsurer,bytheprincipalofficerand, if the notice so requires, also by an auditor or actuary, or both.


41  Allbooks,records,registersanddocumentsofeveryinsurer,inrespectof theinsurancebusinesstransactedbyhim inLesotho,shallatallreasonable times be open to inspectionby the Commissioner or any other person appointed by him.


42. (1) If it appears to the Commissioner that any document furnished under section21is inaccurate,ornotpreparedin accordancewiththeprovisionsofthis Act, or defective in any respect, the Commissioner may –


(a)  require  from  the  insurer  such  further  information  as  he  may  consider necessary to correct or supplement such statement;

(b)call upon the insurer to submit for his examination at the place of business of the insurer or at the Commissioner’s office,as he may direct,any books of accounts, register or document;

(c)  decline  to  accept  any  such  statement  unless  the  inaccuracy  has  been corrected or the deficiency has been supplied, and if he declines to accept any such statement, the insurer shall be deemedtohavefailedtocomplywiththe provisions of section 21.


(2)Itshallbethedutyof theinsurer tocomplypromptlywiththe demandmade under paragraphs (a) and (b) of sub-section (1).


43. The Commissioner may prescribe the basis and method of calculating the prescribesnoinsurershallcausetheliabilityinrespectof anylifeinsurance prescribed.

44.(1)IftheCommissionerhasreasonto believethattheinterestsofthe policyholdersofaninsurerareinjeopardyorthataninsurerisunabletomeet his obligationsor has madedefaultin complyingwithanyoftheprovisionsof thisAct,hemayinvestigatetheaffairsoftheinsurerand,ifnecessary,employ an auditor or actuary or any other person as he deems fit.


(2)The    directors    and   executive   officers    of   the   insurer    shall    aid    the Commissioner in conducting the examinationasfarasitis intheirpowerto doso.  Therefusalofanyinsurertosubmittoexaminationshallbeground for cancellation of registration of suchinsurer in accordancewithsection12.


(3)The Commissioner may examine any director, manager, officer, employee or agentoftheinsureronoathonanymatterpertainingtotheaffairsof the insurer.




















Power tocall for information







Inspection of documents, books etc.




Investigation regarding annual statements


policy  to  be  less  than  the  liability  computed  on  the  basis  and  method  so

liabilities  in  respect  of  life  insurance  policies  and,  in  the  event  that  he  so

of insurers








(4)WhenanexaminationismadeunderthissectiontheCommissionershall maketotheMinistera truereportof itwhichshallcompriseonlyfacts appearinguponthebooks,recordsorotherdocuments ofsuchinsurerand such  conclusions  and  recommendations  as  may  reasonably  be  warranted fromsuch facts.


(5) TheCommissionershallnotifytheinsurerexaminedofthecontentsofthe report mentioned in sub-section (4) andshall afford such insurer a reasonable opportunitytoobtainfurtherdetailsandtodemandahearingwithreference to facts, conclusions or recommendations therein contained.


(6)TheCommissionermayrequiretheinsurertocomplywithinaspecified time,withanydirections hemayissuetoremedydefectsdisclosedbysuch examination.

(7) The  Commissioner  may  recommend  in  the  report  to  the  Minister,  the opinionoftheCommissioner,shouldberemoved,orhemayrecommendthe

appointment of any person who is qualified to advise the insurer in rectifying matters.


(8)  The  Minister,  after  considering  the  recommendations  made  under  sub- section(7)andgivinganopportunitytotheinsurertomakerepresentations in writing, may issue such order as he deems fit.


(9)If, as a result of any examination made under this section, the Commissioner isoftheopinionthatitisnecessaryintheinterestofthepolicyholdersand the public that the business of the insurer should be wound up, or if the insurerfailstocomplywithanydirectionsissuedundersub-section (6), the CommissionerwiththeconsentoftheMinistermayapplytothecourtto have the business ofthe insurer wound up.


(10)      Whenanexaminationismadeinpursuanceofthissection,allexpenses of and incidental to suchan examination shall be defrayed by the insurer.



(a)lifeinsurancebusiness:thevalueoftheassets of theinsurerinrespectof all lifeinsurancebusinesstransactedbyhim whichexceedsthevalueof liabilities thereunder by an amount of R30,000;


(b)general insurance business:


insurancetransactedbyhim whichexceedsthevalueofliabilitiesthereunder byanamountofR50,000oronetenthofthepremium incomeinrespectof generalinsurancebusinessduringthelastprecedingcalendaryearwhichever






















Margin of solvency
































Amalgamati on and transferof business























Winding up



















Voluntary winding up




Rules relating










Licencingof agents


is the greater amount.


(2)  Forthepurposeifsub-section(1)ofthissection“assets”doesnotinclude goodwill,furniture,fixturesorvehicles; and“liabilities”includescontingent andprospectiveliabilities,butnotliabilitiesinrespectof sharecapitaland “premium”meansgross premiumforownaccount.


(3)  Iftheinsurerdoesnotmeettherequiredmarginofsolvencystipulatedin section 7, then section 41 shall applyto such insurer.






46. (1) No insurer transacting general insurance business shall amalgamate with or transfer any such business to any other insurer, unless the amalgamation or transfer is sanctioned by the Commissioner.


(2)  No  insurer  transacting  life  insurance  business  shall  amalgamate  such businesswithortransfersuchbusiness to any other insurerunlessthe amalgamation or transfer is sanctioned by the Commissioner.


(3) When an application is made to the Commissioner to sanction any amalgamationreferredtoinsub-section(1)or(2)astatementofthenatureof the amalgamation or transfer, as the case may be, the reason therefore, a draft of the agreement under which the amalgamation or transfer shall be effective, balance sheets, revenue accounts and actuarial reports of each of the two insurers proposingtoamalgamateshallbekeptopenforinspectionbythepolicyholders at the offices of the insurers concerned.

(4)   When   an   application   referred   to   in   sub-section   (3)   is   made,   the Commissionermaysanctiontheagreement,ifheissatisfiedthatsuch agreement will not adversely affect the interestsof the policyholders.


47.  The  Commissioner  may  apply  to  the  court  for  the  winding  up  of  any insurance company on any of the following grounds, namely –


(a) thattheinsurancecompanyhavingfailed tocomplywith anyrequirement under this Act has continued such failure for a period of six months after notice of such failure was conveyed to the insurer by the Commissioner;

(b)that  the  registration  of  the  insurance  company  having  been  cancelled,  a period of more than three months has elapsed since the cancellation;

(c)thatitappearsfromthestatementfurnishedundertheprovisionsofthisAct orfrom theresultsofanyinvestigationmadethereunderthattheinsurance company is insolvent; or

(d)thatthecontinuanceoftheoperationsoftheinsurancecompanyinLesotho is prejudicial to the public interest.



towinding up

by court








48.  Notwithstanding  anything  contained  in  the  Companies  Act  1967  an insurance company shall not be wound up voluntarily except for the purpose of effecting amalgamation or transfer.


49.ProvisionsofPartIVoftheCompaniesAct1967relatingtothewindingup of companies shall also apply in the case of winding up of insurance companies.



50. (1) No person shall act in Lesotho asan insurance agent save under a valid licence granted under this section.


(2) The Commissioner may issue to any individual making an application in the form prescribedandnotsufferingfrom anyofthedisqualificationsspecifiedin sub-section(6)andafterpaymentofthe prescribedfee,alicencetoactasan insurance agent for the purpose of soliciting or procuring insurance business.


(3)The Commissioner,before issuing a licence under sub-section (2), may demandthattheapplicantpossesscertainprofessionalqualifications relating to the principles and practices of insurance.

(4) A licence issued under this section shall entitle the holder to act as an insurance agent for the insurer named in the licence.


(5)Alicenceissuedunderthissectionshallremaininforce foraperiodofone yearfromthedateofissue,andshall,iftheapplicantdoesnotsufferfromanyof the disqualifications specified in sub-section (6), be renewed every year upon an application being made in the prescribed form.


(6) No person shall be an insurance agent if he – (a)is a minor;

(c)has been found guilty of a criminal offence involving dishonesty;


insurance or the winding up of an insurance company, or in the course of an investigation of the affairs of an insurer, has been found guilty of, or has knowingly participated in or connived at any fraud, against an insurer or an insured; or


not authorised to do so or procures by fraudulent representations payments of

















































Register of insurance agents


Penalty for non-licensed agents






Registration of insurance brokers


any premium on an insurance policy.


(d)in  the  course  of  any  judicial  proceedings  relating  to  any  policy  of

(b)is of unsound mind;




































































during the currency of such licence such agent becomes or is found to be disqualified undersub-section(6).


(8)TheCommissionermayprescribeany other reasonable conditions on the licence of any agent of insurance.


51.Aninsurerwhoemploysinsuranceagentsshallmaintain aregistershowing thenameandaddressofeveryinsuranceagentappointedbyhim andthedateon which the appointment began and the date, if any, on which it ceases.


52. Any person who is notaholderof alicenceissued undersection50 who acts as an insurance agent shall be punishable with a fine which may extend to fifty rand, an insurer who appoints as an insurance agent any person who is not licensedunderthisActshall beguiltyofanoffenceandliableonconvictiontoa fine of five hundred rand.






(2) Anapplicationforregistrationasaninsurancebrokermaybemadetothe Commissioner in the form prescribed by any person having the prescribed qualifications.


(3)  TheCommissionermay,afterpaymentof aprescribedfeetohim grantthe applicantalicenceor,refusetograntanysuchlicenceif he is satisfiedthatsuch applicant isdisqualified under section 50 (6).


(4)Theregistrationofaninsurancebrokerunderthissectionshallremainin forcefortheperiodofoneyearfromthedateofissueandshall,onapplication, be renewable.


(5)TheCommissionermaycanceltheregistrationofanyinsurancebrokeron any ground on which he could have refused to grant the application for registration.


54.  (1)  Every  insurance  broker  shall  keeprecords  of  insurance  transactions handledbyhimconsistingofbusinessplacedorarrangedinLesothoand outside Lesotho;andshallfurnishtotheCommissionerwithinsixmonthsaftertheend of each calendar year a balance sheet, revenue account and a report on the insurance transactions made by him during that year.


(2)TheCommissionermayatanytimebywrittennoticedemandfrom an insurancebrokerinformationor theproductionof any documentwhich relatesto any matter connected with insurance business handled by such broker.


(3)Noinsurancebrokerinthecourseof hisbusinessshallnegotiateanycontract





















Conducting of business by insurance brokers



registered as such in accordance with the provisions of this section.



































ofinsurancewithapersonwhoisnotinsurer,normayanypersoninLesotho solicit insurance business for any insurance company or association of underwriters not entitled to carry on that business in Lesotho.


(4) Thereferenceinsub-section(3)abovetoacontractofinsuranceandto insurance business shall not applytore-insurance.


(5)If in any particular case an insurance broker satisfies the Commissioner that byreasonoftheexceptionalnature oftheriskorotherexceptional circumstancesitisnotreasonablypracticableto effectaninsurancecontract with an insurer, the Commissioner may permit the insurance contract with suchinsuranceorre-insurancecompany or associationof underwritersas the insurance broker sees fit.



55.(1)Notwithstandingtheprovisionsof anylawrelatingtothepublicservice, theMinistermayappointapersontobestyledCommissionerofInsurance, whose office shall be an office in the public service.


(2)TheCommissionershallberesponsible for the generaladministrationand enforcement of this Act and for that purpose shall exercise the functions of that office conferred on himby this Act.


(3) The Minister shall appointsuch other public officers as may be necessary to assisttheCommissionerintheperformanceofhisdutiesandfunctionsunder this Act.


(4)IntheexerciseofhisfunctionstheCommissionershallactinaccordance with any general direction of the Minister.


(5)IftheCommissionerisnotaqualifiedactuary,heshallfromtimetotime seekadviseonthetechnicaladministration andenforcementofthisAct, particularly in respect ofactuarial matters.


(6)TheCommissionershallassisttheMinister in the formulation of policy for anymatterrelatingtothesounddevelopmentandgrowthofinsurancebusiness in Lesotho.


56.(1)TheCommissionershall, submittotheMinister,notlaterthantheendof eachcalendaryear,areportontheworkingofthisActduringthepreceding




















































Penalty for false statement






Penalty for non- compliance with Act


calendar year and a general review ofthe insurance business for that year.


Report of the







yearshowingthenumberandkindofinsurers, theirassets,liabilities,premiums written, insurance in force, and the number and kind of insurance intermediaries, andanyotherinformationwhichtheCommissionerdeemsnecessarytoinclude in the report.



57. Any person who willfully makes a false statement, knowing the same to be false,inanystatement,report,certificate,balancesheetoranyotherdocument





58.Anyinsurerorpersonwhomakesadefaultincomplyingwithoractsin shallbeguiltyofanoffenceandshall,exceptwhereadifferentpenaltyis defaultorcontravention,toapenaltynotexceedingtwentyrandforeveryday

during  which  the  default  or  contravention  continues,  and  every  director,




59.AnydecisiontakenbytheCommissionerunderthisAct,includingany theMinister.  Theappealshallbenotedandprosecutedinthemannerandwithin

the time which may be prescribed.


60.Anynoticeissuedundertheprovisions ofthisActandanyprocessinlegal proceedings maybeservedonaninsurancecompanybyleavingthesameatthe principal office of the company in Lesotho.


61. Everyinsurancecompanyshallbe subject to the provisions of this Act in relation toanyclassof insurancebusinessaslongasitsliabilitiesinLesothoin respectof anyinsurancebusiness remain unsatisfied or are not otherwise provided for..


62.WhereaninsurerisacompanyincorporatedundertheCompaniesAct,it shallnotbenecessaryfor such companytofileitsbalancesheetandaccounts withtheRegisterof Companiesasrequired by sub-section (3)ofsection96of that Act.
















Service of process upon insurance companies


Companies tobesubject toact while liabilities remain unsatisfied Exemption fromcertain provisionsof the Companies Act Amendment of motor vehicles insurance order 1972








three thousand rand or to both.



















64.TheMinistermaymakeregulationsgenerallyforthebettercarryingoutof the objects of this Act and, in particular, for –


(a)anypurposeforwhichregulationsarerequiredtobemadeunderthe provisions of this Act;

(b)making  deposits  with  a  bank  in  Lesotho  by  an  applicant  for registration as an insurer;

(c)themannerofinvestingtheassetsof aninsurerinapprovedsecurities and otherwise and the method of valuating these assets;

(d)theprotectionofownersoforbeneficiariesunderinsurancepolicies in the event of liquidation or bankruptcy of an insurance company;

(e)the collection ofstatistical information relevant to insurance;

(f)prescribingthefeestobepaidinconnectionwiththeadministration ofthis Act;

(g)the limitation of expenses of management in insurance business; (h)the limitation of expenditure on commission;

(i)  prescribedminimumqualificationsforinsuranceintermediariesand executive insurance officers;

(j)  prescribing anything which underthis Act may be prescribed.


65. The Insurance Proclamation No. 65 of 1956 is hereby repealed.