INSURANCE ACT

to provide for the regulation of the insurance industry; provide for the supervision of insurers, reinsurers and intermediaries; provide for the financial regulation of insurers, reinsurers and intermediaries; provide for the regulation and supervision of microinsurance businesses; provide for the management and shareholding of insurers, reinsurers and intermediaries; provide for the auditing and corporate responsibility of insurers, reinsurers and insurance brokers; continue the existence of the Policyholder's Protection Committee and the Insurance Fidelity Fund; provide for the establishment of the National Reinsurance Company; give effect to the Agreement establishing the African Reinsurance Corporation and the Agreement establishing the ZEP-RE (Preferential Trade Area Reinsurance Company); repeal and replace the Insurance Act, 1997; and provide for matters connected with, or incidental to, the foregoing.

[On Notice]

Act 38 of 2021.

PART I
PRELIMINARY PROVISIONS

1. Short title and commencement

This Act may be cited as the Insurance Act, and shall come into operation on the date appointed by the Minister by statutory instrument.

2. Interpretation

In this Act, unless the context otherwise requires-

"actuary" means a person appointed as an actuary under section 69;

"Agreement" means the Agreement establishing the ZEP-RE (Preferential Trade Area Reinsurance Company) signed by Heads of State and Government of the Common Market for Eastern and Southern Africa region on 21st November, 1990, in Mbabane, Swaziland;

"Africare Agreement" means the Agreement establishing the African Reinsurance Corporation, which was signed on behalf of the African States, members of the Organisation for African Unity (now African Union) and the African Development Bank on 24th February, 1976, in YaoundÃ©, Cameroon and came into force, in respect of Zambia, on 31st January, 1977;

"appropriate authority" means the Minister responsible for, or such public body having powers under, any other written law over an incorporate or unincorporate entity and the management of insurance information and includes a public officer or employee of a statutory body or institution under the following laws-

(a) the Narcotic Drugs and Psychotropic Substances Act;

(b) the Zambia Police Act;

(d) the Prohibition and Prevention of Money Laundering Act, 2001;

(e) the Road Traffic Act, 2002;

(f) the Information and Communications Technologies Act, 2009;

(g) the Competition and Consumer Protection Act, 2010;

(h) the Financial Intelligence Centre Act, 2010;

(i) the Anti-Corruption Act, 2012;

(j) the Banking and Financial Services Act, 2017;

(k) the Corporate Insolvency Act, 2017;

(l) the Companies Act, 2017; and

(m) the Securities Act, 2016;

"assessor" means a person, not being a loss adjuster, who, in the event of a claim against an insurer for loss or damage, assesses the extent of the loss or damage;

"associate" has the meaning assigned to the word in the Anti-Corruption Act, 2012;

"auditor" has the meaning assigned to the word in the Accountants Act, 2008;

"Authority" means the Pensions and Insurance Authority established under the Pension Scheme Regulation Act, 1996;

"bank" has the meaning assigned to the word in the Banking and Financial Services Act, 2017;

"banking business" has the meaning assigned to the word in the Banking and Financial Services Act, 2017;

"Bank of Zambia" means the Bank of Zambia established by the Constitution;

"beneficial owner" has the meaning assigned to the word in the Companies Act, 2017;

"beneficiary" means a person for whose benefit a policy is issued;

"Board" has the meaning assigned to the word in the Pension Scheme Regulation Act, 1996;

"board of directors" means the governing board of a licensee;

"ceding insurer" means an insurer who assigns a risk under a policy to a reinsurer;

"Chairperson" means the person appointed as Chairperson of the Board under the Pension Scheme Regulation Act, 1996;

"child" has the meaning assigned to the word in the Constitution and includes a child born out of wedlock, a step child, an adopted child or a posthumous child born within 10 months from death of the father;

"citizen" has the meaning assigned to the word in the Constitution;

"citizen owned company" means a company where 100 per cent of its equity is owned by citizens and in which citizens have significant control of the management of the company;

"claims agency business" means the business of negotiation and settlement of a claim arising from a policy, with an insurer or the insurer's representative, on behalf of an insured person;

"claims agent" means a person licensed to carry on a claims agency business;

"Commission" means the Competition and Consumer Protection Commission established by the Competition and Consumer Protection Act, 2010;

"Committee" means the Policyholder's Protection Committee continued under section 180;

"company" has the meaning assigned to the word in the Companies Act, 2017;

"contract of insurance" means an agreement under which a person pays a premium to an insurer who undertakes to indemnify the person against risk or loss, damage or liability arising from the occurrence of some specified contingency;

"contract of reinsurance" means an agreement under which one or more reinsurers agree to indemnify a ceding insurer against all or part of a risk arising under a policy that the insurer has issued;

"control" in relation to the management of an insurer, has the meaning assigned to the word in the Companies Act, 2017;

"court" has the meaning assigned to the word in the Constitution;

"customer" includes a policyholder or beneficiary under a policy;

"director" has the meaning assigned to the word in the Companies Act, 2017;

"financial interest" means direct material interest of a financial monetary or economic nature or direct material interest to which a monetary value may be attributed;

"financial year" means a period specified in section 104;

"fit and proper person" means a person who meets the criteria prescribed by the Minister;

"foreign company" has the meaning assigned to the word in the Companies Act, 2017;

"funeral policy" means a policy under which an insurer assumes a contingent obligation dependent on the death of a beneficiary for expenses relating to the funeral and interment of the beneficiary;

"general insurance business" means a business of a class that the Minister may, on recommendation of the Board, prescribe;

"general insurer" means a company that carries on general insurance business;

"holding company" has the meaning assigned to the word in the Companies Act, 2017;

"insolvent" has the meaning assigned to the word in the Corporate Insolvency Act, 2017, and includes a failure to meet the solvency margins or capital adequacy requirements prescribed by the Minister;

"inspector" means a person appointed by the Authority as an inspector under section 114;

"insurance" means a mechanism or service for the transfer of all or part of certain risks of financial loss or defined benefit by one party, the insured or beneficiary, to another party, the insurer or entity that assumes the financial liability in exchange of payment of a premium or contribution, through which-

(a) the insurer or entity that assumes the liability undertakes to indemnify or compensate the insured or beneficiary on the occurrence of loss as defined in the policy or contract between parties;

(b) the insurer or entity that assumes the liability collects and pools the premium or contribution paid for the purposes of providing indemnity, compensation or creating reserves for future loss; and

(c) the insurer or entity that assumes the liability on the expiry of the policy or contract between the parties retains the premium or funds earned from such a service;

"insurance agency business" means a business, by a person who is not an employee of an insurer who initiates insurance business on behalf of the insurer;

"insurance agent" means a person who is licensed to engage in an insurance agency business under this Act;

"insurance broker" means a company not being an agent of an insurer or reinsurer, acting independently and carries on insurance or reinsurance brokerage, in consideration for a commission or other compensation from an insurer or reinsurer;

"insurance brokerage" means the business of-

(a) bringing together persons seeking a contract of insurance or reinsurance;

(b) carrying out work preparatory to the conclusion of a contract of insurance or reinsurance; or

"insurance business" means a business-

(a) of undertaking liability by way of insurance, including reinsurance, in respect of any loss of life and personal injury and any loss or damage, including liability to pay damage or compensation, contingent on the happening of a specified event, and any business incidental to insurance business;

(b) by a person, other than a person carrying on banking business, of carrying on contracts for fidelity bonds, performance bonds, administration bonds or customs bonds or similar contracts of guarantee in return for the payment of one or more premiums; or

(c) by a person, other than a person carrying on banking business, or carrying on capital redemption contracts and any business incidental to insurance business;

"Insurance Fidelity Fund" means the Insurance Fidelity Fund continued under section 180;

"insurer" means a company licensed to carry on an insurance business under this Act and includes a microinsurer;

"intermediary" means an insurance agent, insurance broker, underwriting agent or microinsurance aggregator or a licensee who invites other persons to make offers or proposals or to take other steps with a view to taking up a policy, but excludes a person who publishes invitations on behalf of, or to the order of, some other person;

"legal practitioner" has the meaning assigned to the word "practitioner" in the Legal Practitioners Act;

"legally disqualified" means having no legal capacity as prescribed in section 4 of the Mental Health Act, 2019;

"licence" means a licence issued under this Act;

"licensee" means a holder of a licence issued under this Act;

"life policy" means a contract under which an insurer assumes a contingent obligation dependent on human life, including a contract of insurance customarily regarded as a contract of life insurance, but excludes a policy-

(a) under which the contingent obligation forms a subordinate part of the insurance effected by the policy; or

(b) of a kind prescribed by statutory instrument in accordance with this Act;

"long-term insurer" means a company that carries on long term insurance business;

"long term insurance business" means insurance business of a class that the Minister may, on the recommendation of the Board, by statutory instrument, prescribe;

"long term policy" means a policy classified as a long term policy in guidelines issued by the Authority under this Act;

"loss adjuster" means a person who, in the event of a claim against an insurer, investigates the circumstances of the loss, assesses and quantifies the insurer's liability under a policy;

"medical scheme fund management business" means the business of undertaking liability in return for contributions from members to partially or fully discharge the expenditure incurred in connection with a member, or that member's dependents for health services received from health services providers, and includes the provision of a personal medical saving facility;

"merger" has the meaning assigned to the word in the Competition and Consumer Protection Act, 2010;

"microinsurance agency business" means an insurance business of a class that the Minister may, on recommendation of the Board, prescribe;

"microinsurance agent" means a person licensed to carry on a microinsurance agency business;

"microinsurance aggregator" means-

(a) an entity incorporated under the Companies Act, 2017;

(b) an entity registered as a co-operative society under the Co-operative Societies Act; or

(c) any other association of persons for the mutual benefit of its members and registered as a microinsurance aggregator by the Registrar;

"microinsurance business" means the business of a class prescribed by the Minister under this Act;

"microinsurance policy" means a contract under which a person, in return for a premium, undertakes to provide policy benefits subject to the limitations prescribed by the Minister under this Act;

"microinsurer" means a company that carries on microinsurance business;

"minor" means a person who has not attained the age of 18;

"money laundering" has the meaning assigned to the word in the Prohibition and Prevention of Money Laundering Act, 2001;

"National Reinsurance Company" means a company established under section 77;

"partnership" means the relation which subsists between persons carrying on a business in common with a view to profit;

"policy" means a contract of insurance of any kind;

"policyholder" means a person who is entitled to enforce a benefit provided for in a policy;

"premium" means a payment paid by a policyholder under a policy;

"premium rate" means the cost of insurance broken down to price per unit;

"register" means the register of insurance service providers established and maintained under section 168;

"Registrar" means the person appointed as Registrar under the Pension Scheme Regulation Act, 1996;

"regulatory statement" means a directive, guideline, order, circular or bulletin issued by the Authority for the efficacious implementation of this Act;

"reinsurance" means the transfer of a risk assumed by an insurer to a reinsurer;

"reinsurer" means a company licensed to carry on the business of reinsurance under this Act, and includes a retrocessionaire;

"Reinsurance Company" means the ZEP-RE (Preferential Trade Area Reinsurance Company), established under Article 2 of the Agreement, as a regional organisation responsible for promoting trade, development and integration within the Common Market for Eastern and Southern Africa region through the trade of insurance and reinsurance business;

"Reinsurance Corporation" means the African Reinsurance Corporation established by the Africare Agreement;

"related company" has the meaning assigned to the word in the Companies Act, 2017;

"repealed Act" means the Insurance Act, 1997;

"risk surveyor" means a person who assesses the potential financial risk posed to an insurer by issuing a policy and provides the insurer with information on how to reduce the risk or whether to issue the policy;

"secretary" has the meaning assigned to the word in the Companies Act, 2017;

"senior officer" means a chief executive officer, chief financial officer, head underwriting, head claims, manager or other management personnel of a licensee;

"subsidiary" has the meaning assigned to the word in the Companies Act, 2017;

"statutory fund" means a fund established and maintained in accordance with section 63;

"surrender value" means the sum of money payable by an insurer to a policyholder in the event that the policyholder voluntarily terminates the policy before its maturity or the occurrence of the insured event;

"take-over" has the meaning assigned to the word in the Securities Act, 2016;

"terrorist" has the meaning assigned to the word in the Anti-Terrorism and Non-Proliferation Act, 2018;

"terrorism financing" has the meaning assigned to the word in the Anti-Terrorism and Non-Proliferation Act, 2018;

"treaty reinsurance" means a contract of reinsurance in which the reinsurer accepts a specific level of risk from the primary insurer, and cognate expressions shall be construed accordingly;

"underwriting agency business" means the business of issuing and pricing policies on behalf of an insurer;

"underwriting agent" means a person licensed to carry on underwriting agency business under this Act;

"unexpired risk" means an obligation of an insurer under a policy for the remainder of the duration of the policy;

"unsafe and unsound practice" means-

(a) the conduct of affairs by a licensee in a manner that is-

(i) detrimental to the stability of the insurance industry or the interests of a policyholder or creditor;

(ii) prejudicial to the interest of the licensee; or

(iii) in contravention of this Act or any other relevant written law; or

(b) any other practice that the Authority may designate as unsafe and unsound;

"Vice-Chairperson" means the person appointed as Vice-Chairperson of the Board in accordance with the provisions of the Pensions Scheme Regulation Act, 1996; and

"Zambia Institute of Chartered Accountants" means the Zambia Institute of Chartered Accountants established by the Accountant's Act, 2008.

PART II
ADMINISTRATION

3. Administration of Act

This Act shall be administered by the Authority.

4. Seal of Authority

The seal of the Authority kept in terms of the Pension Scheme Regulation Act, 1996, shall be used for the purposes of this Act and the impression made for that purpose shall be judicially noticed.

5. Registrar

The Registrar appointed under the Pension Scheme Regulation Act, 1996, shall, in addition to the Registrar's functions and powers specified in that Act and any other written law, exercise the power and perform the functions conferred on the Registrar in this Act.

PART III
REGULATION OF INSURANCE INDUSTRY

6. Prohibition on carrying on insurance business without licence

(1) A person shall not carry on insurance business or hold oneself out as an insurer, reinsurer, intermediary, assessor, claims agent, loss adjustor or risk surveyor unless the person is licensed under this Act.

(2) A person who contravenes sub-section (1) commits an offence and is liable, on conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.

7. Types of licences

A licence issued by the Authority shall authorise the licensee to provide any of the following types of insurance services-

(a) insurance;

(b) reinsurance;

(d) insurance brokering;

(e) loss adjustering;

(f) microinsurance aggregation;

(g) microinsurance agency;

(h) risk surveyor;

(i) assessor;

(j) claims agency;

(k) insurance agency; and

(l) underwriting agency.

8. Categories of insurance business

Subject to section 9, a person may engage in-

(a) long-term insurance business;

(b) general insurance business; or

9. Restriction on composite insurance

(1) Subject to sub-section (2), the Authority shall not issue a licence to carry on-

(a) long-term insurance business if the applicant is already carrying on, or has applied to be licensed to carry on, general insurance business; or

(b) general insurance business if the applicant is already carrying on, or has applied to be licensed to carry on, long term insurance business.

(2) Sub-section (1) shall not apply to a reinsurer and microinsurer.

10. Application for insurance licence

A person who intends to provide an insurance service under section 7 shall, apply to the Authority, for a licence, in a prescribed manner and form on payment of a prescribed fee.

11. Consideration and grant or refusal to grant licence

(1) The Authority shall, on receipt of an application, made under section 10, within 90 days, grant a licence to the applicant on terms and conditions that may be prescribed, if the applicant-

(a) is capable of carrying on insurance business as specified in this Act;

(b) is capable of protecting the interests of policyholders in preference to, but not to the exclusion of, the interests of the shareholders and other providers of the applicant's capital;

(c) meets the minimum financial, solvency and liquidity requirements, or other criteria that may be prescribed in accordance with this Act or any other written law in respect of the insurance business to which the application relates; and

(d) is competent to conduct the insurance business for the class to which the application relates.

(2) A licensee shall-

(a) comply with the prescribed terms and conditions of a licence;

(b) meet the prescribed minimum capital requirements; and

(3) The Authority shall, where an application fails to comply with the requirements under sub-section (1), refuse to grant the licence to the applicant.

(4) The Authority shall, within 90 days of receipt of an application under sub-section (3), notify the applicant of the decision to reject the application, stating the reasons for the rejection.

(5) Where the Authority fails to notify an applicant of the Authority's decision to grant or refuse the licence within the period specified under sub-sections (1) and (4), the application is considered to be granted.

12. Duration of licence

(1) A licence granted under this Part shall remain in force subject to the prescribed conditions unless earlier suspended, cancelled or surrendered.

(2) A licensee shall pay the prescribed annual fee and comply with the terms and conditions of the licence, or this Act.

13. Surrender of licence

Where a licensee decides not to continue operating, the licensee shall surrender the licence to the Authority.

14. Suspension and cancellation of licence

(1) Subject to section 120, the Authority may take supervisory action by suspending or cancelling a licence.

(2) The Authority shall, before suspending or cancelling a licence, in accordance with sub-section (1)-

(a) give to the licensee, in the prescribed form and manner, written notice of its intention to suspend or cancel the licence;

(b) give the reasons for the intended suspension or cancellation; and

(3) Where a licensee takes remedial measures to the satisfaction of the Authority, within the period specified in sub-section (2), the Authority shall not suspend or cancel the licence.

(4) The Authority shall, in making its final determination on the suspension or cancellation of a licence, consider the submissions made by the licensee, under sub-section (2), and any remedial measures taken under sub-section (3).

(5) The Authority may suspend or cancel a licence if the licensee, after being notified under sub-section (2), fails to show cause or does not take any remedial measures to the satisfaction of the Authority within the specified period.

(6) The Authority shall, where it suspends or cancels a licence under this section-

(a) publish a notice of the suspension or cancellation in the Gazette, daily newspaper of general circulation or in other electronic media in the Republic; and

(b) take any additional steps necessary to inform the public of the suspension or cancellation of the licence.

15. Effect of suspension or cancellation of licence

(1) Where a licence is suspended under this Act, the licensee shall, for the period of the suspension of the licence, cease to be entitled to the rights and benefits conferred by the licence and this Act.

(2) Where a licence is cancelled under this Act, the licensee shall-

(a) with effect from the date of the cancellation, cease to be entitled to the rights and benefits conferred by the licence and this Act; and

(b) surrender the licence to the Authority.

(3) A licensee whose licence is suspended or cancelled under this Act shall not, from the date of receiving a notice of the suspension or cancellation from the Authority-

(a) enter into a new contract in relation to the business authorised by the licence; or

(b) renew or vary a contract entered into with any person in relation to the business authorised by the licence.

(4) Where a licence is suspended or cancelled under this Act, and the licensee has a liability in respect of the business authorised by the licence-

(a) this section shall not be a defence by the licensee against that liability; and

(b) the licensee shall take necessary action, or an action that the Authority may direct, to make good the liability.

16. Loss or damage of licence

(1) A licensee who loses a licence, issued under this Act, shall-

(a) within seven days of the loss, inform the Registrar in writing; and

(b) apply to the Authority, in the prescribed manner and form, for a duplicate licence.

(2) A licensee whose licence is defaced or damaged shall apply to the Authority for a duplicate licence.

(3) The Authority shall, where an application made under sub-section (1) or (2) meets the requirements of this Act, issue a duplicate licence in a prescribed manner and form on payment of a prescribed fee.

17. Application for amendment of licence

(1) Subject to section 6, a licensee may apply to the Authority for an amendment to a licence to authorise the licensee to carry on insurance business, of a class not authorised by the licence in the prescribed manner and form on payment of a prescribed fee.

(2) The Authority shall, within 60 days of receipt of an application to amend a licence under sub-section (1)-

(a) amend the licence on the terms and conditions that the Authority may specify in the licence and endorse the licence; or

(b) refuse to amend the licence.

(3) Subject to sub-section (2), the Authority shall within seven days of its decision, notify the applicant of the Authority's decision.

18. Accepting insurance business from unlicensed person

(1) Subject to section 166, a licensed insurer or reinsurer shall not accept insurance business or pay commission or other form of remuneration to a person who is not licensed in accordance with this Act.

(2) A licensed insurer or reinsurer who contravenes sub-section (1) commits an offence and is liable, on conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a term not exceeding two years, or to both.

19. Entering into insurance contract with unlicensed person

(1) A person shall not cause another person to enter into, or to make an application to enter into, an insurance business with a person who is not licensed in accordance with this Act.

20. Repayment of funds

(1) A person holding funds obtained by conducting insurance business in contravention of this Act shall repay the funds in accordance with the directions that the Registrar may give.

(2) A person who fails to comply with the directions given under sub-section (1) commits an offence and is liable, on conviction, to pay the Authority a fine of twenty thousand penalty units for each day that the failure to comply continues.

(3) Funds repayable under this section which remain unpaid at the end of the period directed by the Registrar for repayment is a debt due to the Authority in trust for a person who appears to the Authority to be lawfully entitled to the funds.

(4) The Authority may institute an action in a court of competent jurisdiction to recover funds repayable under this section.

(5) Nothing in this section relieves a person from criminal liability as provided in this Act, or any other written law, as a result of the person's contravention of this section.

21. Insurance broker to transmit premium

(1) A licensed insurance broker shall, where a premium on a policy is paid to the licensed insurance broker by a client, within 14 days or other period that may be agreed, in writing, between the licensed insurer and the licensed insurance broker, transmit the premium to the licensed insurer, less any agreed commission or other charges payable by that licensed insurer to the licensed insurance broker.

(2) A licensed insurance broker who contravenes sub-section (1) shall, in addition to the outstanding premium payable to the licensed insurer, be liable to pay interest to the licensed insurer at the prevailing Bank of Zambia policy rate plus 10 per cent of that rate.

(3) Despite sub-section (2), a licensed insurance broker who contravenes this section commits an offence and is liable, to pay to the Authority an administrative penalty not exceeding ten thousand penalty units for each day that the offence continues.

22. Separate client account

(1) A licensed insurance broker shall deposit, in a separate client account, moneys received by the licensed insurance broker from or on behalf of a client and shall keep that money separate from the money belonging to the licensed insurance broker.

(2) The Registrar may, in writing, direct a licensed insurance broker to disclose a client account and the manner in which the account is being maintained.

(3) A licensed insurance broker shall not maintain a client account in a bank in which the licensed insurance broker, a director or partner of that licensed insurance broker is the beneficial owner.

(4) A licensed insurance broker who contravenes this section commits an offence and is liable, to an administrative penalty not exceeding ten thousand penalty units for each day that the offence continues.

PART IV
INSURANCE POLICIES

23. Lodging of insurance form

(1) A licensed insurer shall at least 30 days before use of a policy form or proposal form, lodge with the Registrar a copy of the policy form.

(2) The Registrar may, for reasons that may be prescribed, prohibit the use of a form lodged under sub-section (1), unless the form meets the requirements that the Registrar may determine.

(3) A licensed insurer who contravenes this section commits an offence and is liable, on conviction, to a fine not exceeding twenty thousand penalty units.

24. Form of policies

(1) A licensed insurer shall issue a policy which contains terms and conditions that are in legible print and clear typeface of a legible font as prescribed.

(2) A licensed insurer who contravenes sub-section (1) commits an offence.

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