‘Insurance companies still have a chance’
THE Central Bank of Lesotho, CBL has said the three insurance companies whose licences were revoked for failing to meet the new regulations can still be re-registered.
This follows the gazetting of new statutory requirements by the CBL last year which entail that each insurance company with a share capital was supposed to have a minimum paid-up capital of M4 million from an initial of M65 000 according to the Insurance Act of 1976.
The 1976 Act was however, replaced by the Insurance Act of 2014 and the new conditions were supposed to be adhered to by 21 October 2017.
The statement from the Central Bank read: “The Central Bank of Lesotho, as the Commissioner of Insurance, hereby wishes to inform members of the public that the following insurance companies are no longer licensed to conduct insurance business in Lesotho: Medi-life Assurance Ltd, the Legal Voice Ltd and Law Protection Clinic Ltd”.
“Members of the public are therefore, urged to cease doing business with these companies as in so doing, they shall be exposed to the risk of incurring losses in respect of which they will have no recourse with the Commissioner.”
Moeketsi Phasumane, from CBL’s Insurance, Investments and Securities Supervision Division said the three organisation still have a chance to be reinstated if they can meet all the provisions of the law.
“The three organisation’s may be reinstated if they have meet all provisions of the law,” Mr Phasumane said.
This, he said, would be done according to Section 21 of the Insurance act of 2014.
The section states that “the commissioner may review a licence which was revoked, or register a license that was refused, if satisfied that the circumstances which warranted the revocation or refusal no longer exist, and the insurer or insurance intermediary has complied with any directives which may have been given by the commissioner to rectify non- compliance”.
He said the three had failed to comply with the requirements of the Insurance Act 2014 and implementing Insurance (Capital, Solvency and Reserves Requirements for Insurers) Regulations 2016 with respect to capital requirements.
On whether clients would be refunded their premiums, Mr Phasumane said, “Refund of premiums depends on a number of factors which are still being reviewed by the Central Bank of Lesotho upon completion of this review a response to this question will be provided.”
However, the Principal Officer at Medi-Life Assurance Ltd, Retšelisitsoe Lechesa, said the steep requirements of the new insurance law has forced his company to close down business operations.
Mr Lechesa said his company has since closed down because they could not afford to raise the required M4 million since they are a small, locally owned organisation.
He said they unsuccessfully tried to find strategic partners in order to raise the M4 million and now they have no choice but to close down the business. The company received a letter from CBL to that effect in January this year.
Mr Lechesa however, said the stakeholder consultations that were organised to give input into the draft law should have taken into account the concerns raised by smaller insurance companies before its finalisation.
“The concerns about the ability of smaller insurance companies’ ability to comply with the proposed provision were raised during the consultation process, but it seems they were ultimately not taken into consideration when the law was finalised.
“This was despite the indications that such concerns would be looked into at a later stage when the micro insurance legislation would be drafted,” Mr Lechesa said.
How many people are affected?
How much did they manage to raise?
How many pending cases do they have?
How many people do they employ?
How much business did they handle in 2017?
What about Law Protection Clinic…