A2ii Newsflash| The Kingdom of Eswatini issues microinsurance regulations
The Kingdom of Eswatini has issued The Micro Insurance Regulations, 2020, which came into effect on 18 December 2020. The Regulations describe microinsurance products as available, accessible and affordable to low-income persons.
Eswatini has a population of about 1.2 million people, of whom 58.9% live below the poverty line. It is estimated that 72% are not insured. Recently, it has been reported that insurers have been exploring new channels to expand access, such as insurance products sold through Savings and Credit Co-Operative Societies (SACCOs), banks and the Post Office, as well as group products (i.e. church groupings).
The purpose of the legislation is to promote financial inclusion by providing access to insurance to low-income earners. This will enable a majority of the population to manage both personal and corporate risks and be in a position to venture into business which will in turn contribute to the economic development of the country.
- Ncamiso Ntshalintshali, CEO of the Financial Services Regulatory Authority (FSRA)
Licensing and product approval
The Regulations require potential microinsurers to apply for a license in writing to the authority. Capital requirements are lowered for microinsurers, who need a minimum paid up share capital or non-distributable reserves of 400,000 Emalangeni (this is significantly lower than the current capital requirements for traditional insurers of 2 million Emalangeni).
The Registrar must approve microinsurance products before they can be marketed as such. If an insurer or microinsurer applies for the approval of a product as a microinsurance product and they do not receive an objection within 30 days of application, they may begin to offer the product.
The Regulations state that policy contract provisions shall be fair and easily understood by policy holders, and that premium rates shall not be unfairly discriminatory.
- Policyholders have a cooling-off period of 30 days for policy cancellation.
- Insurers must provide a written policy summary and disclose their claims settlement process, documents required, and expected claims settlement time.
- Insurers must inform policyholders of claims rejections within 10 days of taking the decision.
- Insurers must act on complaints within five days of receiving the complaint and required documentation, and a resolution shall be made within 21 working days.
Technology and electronic means
Embracing accessibility and cost reduction, the regulations allow for electronic means of communication in issuing policy documents or whenever a written response is required.
Inclusive insurance developments in the region
Elsewhere in the Sub-Saharan African region, we have seen some interesting inclusive insurance developments – Lesotho is at an advanced stage of developing microinsurance regulations, and South Africa, Mozambique, and Zimbabwe also regulate microinsurance. Mozambique also has a pilot project for Index-based Insurance.