April 18, 2005
House passes bill to regulate offshore insurance

PARLIAMENT - Parliament has passed the International Insurance Bill that seeks to regulate offshore insurance and related services, to be offered in the Botswana International Financial Services Centre (IFSC).

Tabling the bill, finance and development planning minister Baledzi Gaolathe said companies operating under the IFSC were restricted to conducting non-domestic business in non-Pula currencies.

"Therefore to be licensed to do business under the IFSC, insurance companies cannot be regulated and supervised under the Insurance Industry Act of l987, because it is concerned solely with insurance companies serving only the local or domestic market, hence the need for the proposed bill," he explained.

Giving background to the bill under the IFSC legislative framework, Gaolathe said three pieces of legislation were enacted in l999 to facilitate and regulate the activities of the IFSC, excluding insurance and related services.

These pieces of legislation are the Income Tax (Amendment) Act, the Collective Investment Undertaking Act and the Bank of Botswana (Amendment) Act.

The International Insurance Bill has six parts divided into 32 sections.

Part one of the bill deals with preliminary matters, such as the title and definitions of terms that are used in the bill.

Part Two describes the procedure for the appointment of a regulatory authority and the regulator's responsibility to promote the maintenance of orderly conduct of international insurance business and related services.

The Registrar of Insurance, appointed under provisions of the Insurance Industry Act will also serve as the regulatory authority under the bill.

Further, the registrar is authorised to co-operate with other regulatory authorities in Botswana and internationally, in order to discharge his or her functions efficiently and effectively.

Part Three of the bill deals with the terms, conditions and procedures pertaining to registration and licensing of international insurance firms in the decision making process related to such registration and licensing.

These terms and conditions are intended to ensure that firms are credible and have the capacity to conduct business of insurance and related services in accordance with international standards required by the legislation.

Gaolathe said the bill imposes certain obligations on international insurance firms and gives the regulatory authority powers to deal with any issues or problems that may arise from time to time.

As circumstances change or demand, the regulatory authority is empowered to amend or rescind conditions of registration of an international insurance firm, such as the amount of capital that the companies are required to carry and the asset to liability ratios.

He or she can also impose new conditions such as the organisational structure of the firm.' Further, the registrar is authorised to issue a code of practice, which will provide guidance to auditors and international insurance firms regarding duties and obligations of auditors.

Part VI of the bill deals with the enforcement of the provisions of the law. It provides details on the authorisation of officers who may be conferred with wide ranging powers of authority, search and seizure, with warrants, or in certain cases, without warrants, in order to efficiently expedite enforcement of the provisions of the law, as well as other powers.

Tonota South MP Pono Moatlhodi supported the bill, saying it would go a long way to attract foreign investors to Botswana and contribute towards economic diversification.

Francistown West MP Tshelang Masisi said Botswana, through the IFSC, should work hard to make its service sector one of the best in the region, adding that the country's political stability was a bonus. BOPA