CHAPTER 392
INSURANCE ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

   3.   Classification of insurance business

PART II
REGULATION OF INSURERS AND OTHERS

   4.   Insurance business

   5.   Insurance brokerage

   6.   Loss adjustment

   7.   Assessment of losses

   8.   Claims agency

   9.   Insurances agency

   10.   Application for insurer’s license

   11.   Grant of insurer’s license

   12.   Amendment of license

   13.   Broker’s license

   14.   Loss adjustor’s license

   14A.   Conduct of Business as surveyor

   15.   Assessor’s license

   16.   Insurance agent’s license

   17.   Term of license

   18.   Refusal of license

   19.   Restrictions on business of insurer

   20.   Restrictions on business of broker

   21.   Brokers to transmit premiums

   22.   Holding out

   23.   Insurers not to accept business from unlicensed agents

   24.   Person acting on behalf of unlicensed insurer

PART III
MANAGEMENT AND SHAREHOLDING

   25.   Principal office for insurance business

   26.   Appointment of chief executive officer

   27.   Absence of chief executive officer

   28.   Dismissal of chief executive officer

   29.   Supervision of other appointment

   30.   Employment in two insurers or brokers prohibited

   31.   Insurer’s shareholding in a broker or agent

   32.   Criminal liability of directors

PART IV
FINANCIAL REGULATION OF INSURERS

   33.   Reserves for unexpired risks

   34.   Reserves for outstanding claims

   35.   Statutory funds

   36.   Insurer not carry on business unless solvency requirements are met

   37.   Insurers to submit solvency statements

   38.   Admitted assets

   39.   Admitted liabilities

   40.   Valuation of assets and liabilities

   41.   Capital and other requirements

   42.   Publication of authorized capital

   43.   Re-insurance

   44.   Investment programme

   44A.   Investments of funds

   45.   Accounts and balance sheets

   45A.   Financial year of Insurer and insurance broker

   46.   Life insurer to appoint an actuary

   47.   Qualifications of actuary

   48.   Actuary’s rights and duties

   49.   Life insurers to distribute surplus to policy holders

PART V
TRANSFER OF INSURANCE BUSINESS

   50.   Amalgamation or transfer of insurance business

   51.   Application for approval of amalgamation or transfer

   52.   Notification of policy holders

   53.   Determination of application for approval of amalgamation or transfer

   54.   Effect of amalgamation or transfer

PART VI
WINDING-UP OF INSURERS

   55.   Registrar entitled to be informed and to be heard in connection with winding up of insurer

   56.   Ascertainment of value of liability under policies

   57.   Scheme for re-insurance of policy holders of insurer that is winding up

   58.   Valuation and application of statutory funds

   59.   Preferred creditors of an insurer

PART VII
RETURNS TO BE MADE BY INSURERS

   60.   Returns

   61.   Insurer to provide Registrar with copies of circulated documents

   62.   Notification of changes in particularsof the insurer

   63.   Notification of changes in auditor

PART VIII
DISCIPLINARY ACTION

   64.   Scope of power under this part

   65.   Restriction of business

   66.   Restrictions on dealing with assets

   67.   Maintenance of assets

   68.   Suspension or revocation of license, or refusal of license renewal

   69.   Rescission or variation of prohibition or requirement

   70.   Notices

   71.   Winding up orders

   72.   Receiving orders

PART IX
INSURANCE POLICIES

   73.   Approval of proposal and policy forms

   74.   Premium rates

   75.   Policies to be printed in clearly legible form

   76.   Payment of premiums

   77.   Currency

   78.   Policies and payments to be issued and made in Zambia

   79.   Action by policy holders against insurers

   80.   Policies not invalidated by failure to comply with law

   81.   Minor may insure his life

   82.   Limitation on who may benefit from a life policy

   83.   Protection of proceeds of life policy on during life of holder

   84.   Protection of beneficiaries of life policy on death of policy holder

   85.   Protection afforded in respect of policy inuring to spouse or children

   86.   Further protection afforded in respect of life policy inuring

   87.   Selection for realization of life policies

   88.   Partial realization and partial conversion of policies

   89.   Provisions where life policy assigned or cannot be kept up

   90.   Incorrect statements in proposal for life policy

   91.   Life policies intended to defraud creditor

   92.   Proof of age

   93.   Age incorrectly stated in life policy

   94.   Death of insured by his own act

   95.   Lost or destroyed life policies

   96.   Cancellation of life policy

   97.   Discrimination between life policies prohibited

   98.   Premium rates on life policies

PART X
ADMINISTRATION

   99.   Functions and duties of Registrar

   100.   Repealed

   101.   Power to call for information and production of books or papers

   102.   Examination of re-insurance treaties

   103.   Annual report

   104.   Repealed

   105.   Repealed

   106.   Establishment of Committee

   107.   Functions of Committee

   108.   Repealed

PART XI
THE INSURANCE FIDELITY FUND

   109.   Establishment of Fidelity Fund

   110.   Construction of Fidelity Fund

   111.   Purpose of Fidelity Fund

   112.   Disbursements from Fidelity Fund

   113.   Management of Fidelity Fund

   114.   Liability of Fidelity Fund to be limited

   115.   Recovery of disbursements from defaulters

PART XII
APPEALS

   116.   Appeals against decision of Registrar

   117.   Effects of lodgement of appeal

   118.   Determination of appeal

   119.   Notification of decisions

PART XIII
GENERAL PROVISIONS

   120.   All insurance to be placed with Zambia insurers

   121.   Documents to be signed and copies supplied

   122.   Inspection of documents

   123.   Certified documents as evidence

   124.   Display of certain information

   125.   Insurance forms subject to approval

   126.   Change of name of insurer or broker

   127.   Adaptation of prescribed forms

   128.   False statements etc.

   129.   Certain titles not be used except by persons licensedunder this Act

   130.   Misleading advertisements etc. prohibited

   131.   General penalty

   132.   Regulations

   133.   Repealed

   134.   Membership of professional body

   135.   Repeal of Cap. 392

      SCHEDULE

AN ACT

to regulate the Insurance Industry; to repeal the Insurance Act; and to provide for matters connected with or incidental to the foregoing.

[13 February 1998]

Act 27 of 1997,

Act 26 of 2005.

PART I
PRELIMINARY

1.   Short title

This Act may be cited as the Insurance Act, 1997.

2.   Interpretation

In this Act, unless the context otherwise requires—

...

[“Administration Fund” rep by s 2(a) of Act 26 of 2005.]

admitted asset”, in relation to an insurer, has the meaning assigned to it in section 38;

“assessor” means a person who, where a claim is made against an insurer for loss or damage, assesses the extent of the loss or damage;

“auditor” has the meaning assigned to it in the Companies Act;

“Authority” means the Pensions and Insurance Authority established by section 4 of the Pensions Scheme Regulation Act;

[Ins by s 2(c) of Act 26 of 2005.]

“Board” means the Pensions and Insurance Authority Board established by section6 of the Pensions Scheme Regulation Act;

[Subs by s 2(c) of Act 26 of 2005.]

“broker” means a person who, on behalf of an insured person or a person who intends to take up an insurance policy arranges insurance policies;

[“Chairperson” rep by s 2(a) of Act 26 of 2005.]

“child” includes a child born out of wedlock, a step child, an unborn child or an adopted child;

[Am by s 2(b) of Act 26 of 2005.]

claims agent” means a person who negotiates, on behalf of an insured person, the settlement of an insurance claim with an insurer or the insurer’s representative;

“Committee” means the Policy Holders’ Protection Committee referred in section 106;

[Ins by s 2(c) of Act 26 of 2005.]

company” has the meaning assigned to it in the Companies Act;

[“Council” rep by s 2(a) of Act 26 of 2005.]

director”has the meaning assigned to it in the Companies Act;

“due date of a premium” means the date of commencement of the period of insurance cover referable to that premium under the contract of insurance;

“Fidelity Fund”means the Insurance Fidelity Fund established under section 109;

“financial year” has the meaning assigned to it in the companies Act;

“general insurance business” means insurance business other than life insurance business;

“holder”, in relation to a policy, means the person who is entitled to enforce a benefit provided for in the policy;

“holding company” has the meaning assigned to it in the Companies act;

“insurance agent” means a person who, not being a salaried employee of an insurer—

      (a)   initiates insurance business; or

      (b)   does any act in relation to the receiving of proposals for insurance, the issue of temporary insurance cover-notes, or the collection of premiums;

On behalf of an insurer;

“insurance brokerage” means the business of acting as a broker;

“insurance business” means the business of issuing policies of insurance, and includes re-insurance business;

“insurer” means a company that carries on insurance business;

“life insurance business” means the business of issuing life policies;

“life insurer” means a company that carries on life insurance business;

“life policy” means a policy under which the insurer assumes a contingent obligation dependent on human life, and includes any contract of insurance customarily regarded as a life insurance contract, but does not include-

      (a)   a funeral policy;

      (b)   a policy under which the contingent obligation dependent on human life forms a subordinate part of the insurance effected by the policy;

      (c)   a policy for a period of less than two years; or

      (d)   a policy of a kind or description prescribed by regulations made under this Act;

“long term insurance business” means insurance business of such classes as the Ministry may, on the recommendation of the Board, by statutory instrument, prescribe.

[Ins by s 2(c) of Act 26 of 2005.]

“loss adjustor” means a person who makes assessments of liability, or settles claims, on behalf of an insurer;

“minor” means a person under the age of eighteen years;

“policy” means an insurance contract of any kind;

“re-insurance” means the transfer, whether in whole or in part, of a risk assumed by an insurer, to another insurer;

“Registrar” means the Registrar of Pensions and Insurance appointed under the Pensions Scheme Regulation Act, 1996;

“Secretary” has the meaning assigned to it in the Companies Act;

“Subsidiary” has the meaning assigned to it in the Companies Act’

“statutory fund” means a fund maintained under section 35;

“unexpired risk” means the obligation of an insurer under policy during the period remaining under the policy at any particular time.

3.   Classification of insurance business

   (1) Subject to sub-sections (2) and (3), insurance business shall, for the purposes of this Act, be divided into—

[S 3(1) am by s 3(a) of Act 26 of 2005.]

      (a)   long term insurance business; and

[S 3(1)(a) am by s 3(b) of Act 26 of 2005.]

      (b)   general insurance business.

   (2) Notwithstanding sub-section (1), and subject to sub-section (3), the Registrar may, at the request of an insurer, and on such conditions limitations as the Registrar may fix, determine that any long term insurance business or general insurance business of any particular kind which the insurer carries on or intends to carry on shall be treated for the purposes of this Act as insurance business of a separate class:

Provided that no class of insurance business shall be established under this sub-section in such a manner that it consists partly of life insurance business and partly of general insurance business, without the insurer having obtained a separate license for each of the two types of insurance business.

[S 3(2) am by s 3(c) of Act 26 of 2005.]

   (3) The Registrar shall not accede to a request made under sub-section (2) unless he is satisfied that his determination will not be detrimental to the interests of any person and that it will not defeat the objects and purposes of this Act.

   (4) Subject to sub-section (5), no insurer may transact both general and long term insurance business.

[S 3(4) ins by s 3(d) of Act 26 of 2005.]

   (5) Notwithstanding sub-section (4), 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:

Provided that the Zambia State Insurance Corporation may be permitted to transact both general and long term insurance business for such longer period not exceeding three years from the date on which this Act comes into operation as the Minister may, in consultation with the Board, in writing authorize.

[S 3(5) ins by s 3(d) of Act 26 of 2005.]

PART II
REGULATION OF INSURERS AND OTHERS

4.   Insurance business

   (1) On and from a date prescribed by the Minister by statutory instrument, a person shall not carry on insurance business unless the person is a company licensed under this Act as an insurer.

   (2) On and from the date prescribed under sub-section (1), an insurer shall not carry on insurance business except—

      (a)   in accordance with the terms and conditions of its license under this Act; or

      (b)   where a license is suspended or revoked or its terms and conditions are changed, to the extent certified by the Registrar, or by the liquidator of the insurer, as reasonably necessary for the protection of the interests of policy-holders.

   (3) A person who contravenes this section shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

5.   Insurance brokerage

   (1) On and from a date prescribed by the Minister by statutory instrument, a person shall not engage in insurance brokerage unless the person is a company or partnership licensed under this Act as a broker.

[S 5(1) am by s 4 of Act 26 of 2005.]

   (2) A person who contravenes this section shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

6.   Loss adjustment

   (1) On and from a date prescribed by the Minister by statutory instrument, an insurer shall not engage a person, otherwise than under a contract of employment, to act as a loss adjustor unless the person is licensed under this Act as a loss adjustor.

   (2) Where this section is contravened—

      (a)   the insurer; and

      (b)   the person engaged to act as a loss adjustor, shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units, and where it is proved that the offence was committed with the knowledge or connivance of the Director, Chief Executive Officer or employee, then that Director, Chief Executive Officer or employee shall be guilty of the like offence and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

7.   Assessment of losses

   (1) An insurer shall not engage a person, otherwise than under a contract of employment, to act as an assessor unless the person is licensed under this Act as an assessor.

   (2) Where this section is contravened, both—

      (a)   the insurer; and

      (b)   the person engaged to act as an assessor;

shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units, and where it is proved that the offence was committed with the knowledge or connivance of the Director, Chief Executive Officer or employee then that Director, Chief Executive Officer or employee shall be guilty of the like officer and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

8.   Claims agency

   (1) A person shall not carry on a claims agency business unless the person—

      (a)   is licensed under this Act as a broker or as a claims agent; or

      (b)   is a registered legal practitioner.

   (2) A person who contravenes this section shall be guilty of an office and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

9.   Insurances agency

   (1) A person shall not carry on an insurance agency business unless the person is license under this Act as an insurance agent.

   (2) An insurance agent’s license shall allow the holder of the license to act as and insurance agent for only one registered insurer named in the license.

   (3) A person who contravenes this section shall be guilty of an offence and shall be liable, on conviction, to a fine not exceeding twenty thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

10.   Application for insurer’s license

   (1) A company having share capital may apply for an insurer’s license.

   (2) An application under sub-section (1) shall be in a form approved by the Registrar and shall specify—

      (a)   the name and address of the company;

      (b)   the class or classes of insurance business for which the applicant seeks authorization under the license;

      (c)   such other matters, including any matters relating to the assets and liabilities of the company and its ability to meet its obligations, as may be required to complete the form.

   (3) The application shall be accompanied by copies of—

      (a)   the certificate of incorporation of the company;

      (b)   the certificate of share capital of the company;

      (c)   the articles of the company;

      (d)   each proposal and policy form that is to be used by the company;

      (e)   a detailed statement of assets and liabilities of the company, and their locations if not located in Zambia;

      (f)   such other documents as to the manner in which the applicant proposes to carry on business, and such financial forecasts and other documents and information, the Registrar may require.

11.   Grant of insurer’s license

   (1) A person shall not carry on insurance business in Zambia unless that person is registered as such under this Act.

   (2) The Registrar shall issue the applicant with a license authorizing the applicant to engage in insurance business in the classes for which licensing is sought if on the lodgment of an application by the applicant for an insurer’s license, the Registrar is satisfied that -

      (a)   the business to be authorized by the license will be carried on by the applicant in accordance with this Act and with generally accepted and prudent insurance principles and practices;

      (b)   the applicant’s articles will not prevent compliance by the applicant with any of the requirements of this Act that are applicable to the license and are in all other respects satisfactory;

      (c)   the applicant will protect the interests of policy holders in preference to,. But not to the exclusion of, the interests of shareholders or other providers of its capital;

      (d)   the applicant is likely to be at all times capable of meeting its obligations to policy holders;

      (e)   the applicant is able to meet such minimum financial, solvency and liquidity requirements, or other criteria, as may be prescribed by or under this Act in respect of insurance business of the kind authorized by the license and

      (f)   the applicant is generally competent to conduct insurance business in the classes for which licensing is sought.

   (3) Where the Registrar is not satisfied as to the matters referred to in paragraphs (e) and (f) of sub-section (1), he may allow the applicant to amend the application in respect of the classes for which licensing is sought.

Subject to this Act, a license under this section shall remain in force for a term of one year, but shall be renewable on application made as prescribed by regulations made under this Act.

12.   Amendment of license

   (1) An insurer may apply for amendment of its license so as to obtain authorization to conduct a class of insurance business not currently authorized by the insurer’s license.

   (2) An application under sub-section (1) shall be in a form approved by the Registrar and shall specify the class of insurance business for which authorization is sought.

   (3) The applicant shall be accompanied by copies of—

      (a)   each proposal and policy form that is to be used by the insurer in relation to that class of insurance

      (b)   a detailed statement of assets and liabilities of the insurer, and their locations if not located in Zambia, and

      (c)   such proposals as to the manner in which the applicant proposes to carry on the business, and such financial forecasts and other documents and information, as the Registrar may require.

   (4) The Registrar shall amend the license so as to authorize the applicant to engage in insurance business of the class for which authorization is sought if on the lodgment of an application under sub-section (1), the Registrar is satisfied that—

      (a)   the class of business to be authorized by the license, as amended in accordance with the application, will be carried on by the applicant in accordance with this Act and with generally accepted and prudent insurance principles and practices;

      (b)   the applicant’s articles are consistent with the conduct or that class of insurance business;

      (c)   the applicant is likely to be at all times capable of meeting its obligations to be policy holders;

      (d)   the applicant has sufficient capital to conduct insurance business in that class; and

      (e)   the applicant is generally competent to conduct insurance business in that class.

   (5) The amendment referred to in sub-section (4) shall be subject to such conditions or limitations as the Registrar may specify in the license.

13.   Broker’s license

   (1) A person shall not carry on insurance brokerage in Zambia unless that person is registered as such under this Act.

   (2) The Registrar shall issue a broker’s license to an individual who has a minimum of ten years experience as a licensed agent

   (3) Except as provided by section 18, the Registrar shall issue a broker’s license to a partnership or corporate firm if

      (a)   a majority of its directors are persons who, in the opinion of the Registrar, are of good repute and-

      (i)   have had ten years’ practical experience at management level in insurance brokerage or other comparable work; or

      (ii)   hold qualifications approved by the Registrar and have had an adequate practical experience of insurance brokerage; or

      (b)   where there are only two directors, one of them meets the criteria specified in paragraph (a) and the Registrar is satisfied that the business will be under the management of that director;and

[S 13(3)(b) am by s 5(a) of Act 26 of 2005.]

      (c)   the applicant is able to meet such minimum financial or other criteria as may be prescribed under this Act.

[S 13(3)(c) ins by s 5(b) of Act 26 of 2005.]

14.   Loss adjustor’s license

Except as provided by section 20, the Registrar shall issue a loss adjuster’s license to –

      (a)   any individual who, in the opinion of the Registrar, is of a good repute and who satisfies the Registrar that he has suitable qualifications and experience to perform the duties of a loss adjustor; or

      (b)   any company other than an insurer or broker that, in the opinion of the Registrar, is of good repute and which satisfies the Registrar that its managers and employees have suitable qualifications and experience to enable the company to perform the duties of a loss adjustor.

14A.   Conduct of Business as surveyor

A person shall not carry on business as an insurance risk surveyor unless that person is registered and licensed as such under this Act.

[S 14A ins by s 6 of Act 26 of 2005.]

15.   Assessor’s license

Except as provided by section 20 the Registrar shall issue an assessor’s license to -

      (a)   any individual who, in the opinion of the Registrar, is ofa good repute and who satisfies the Registrar that he has suitable qualifications and experience to perform the duties of an assessor; or

      (b)   any company that, in the opinion of the Registrar, is of good repute and which satisfies the Registrar that its managers and employees have suitable qualifications and experience to enable the company to perform the duties of an assessor.

16.   Insurance agent’s license

   (1) A person shall not carry on business as an insurance agent in Zambia unless that person is registered as such under this Act.

   (2) Except as provided by section 20, the Registrar shall issue an insurance agent’s license to—

      (a)   any individual who, in the opinion of the Registrar, is of good repute and who satisfied the Registrar that he has suitable qualifications and experience to perform the duties of an insurance agent; or

      (b)   any company that, in the opinion of the Registrar, is of good repute and which satisfies the Registrar that its managers and employees have suitable qualifications and experience to enable the company to perform the duties of an insurance agent.

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