SOMALILAND INSURANCE LAW
The new Somaliland Insurance Agency Law, Law No. 92/2020 (May 20021) available only in Somali, Xeerka Hay’adda Caymiska Caymiska, Xeer No. 92/2020.
OLD OUT OF DATE POSTING
No Somaliland laws relating to insurance have been passed and the bill on insurance companies below has not been considered formally by the Parliament. There have been some discussions about what aspects of common insurance practices may not be Sharia compliant, but no bills have been drafted although there is a wide consensus about the pressing need for insurance to cover transport and trading.
THIS BILL WAS DRAFTED BY THE SOMALILAND MINISTRY OF COMMERCE BUT HAS NOT BEEN SUBMITTED TO PARLIAMENT
REPUBLIC OF SOMALILAND
INSURANCE COMPANIES BILL
Licensing of Insurance Companies
Registration of Insurance Companies
Surveyors and Loss Adjusters
Obligations of Insurance Companies
Section 1- Reinsurance
Section III- Solvency Margin
Section IV-Records and Books of Accounts Insurance Companies
Section V- Provisions Concerning Life, Endowment and Annuities
Transfer of Polices, Amalgamation and Cessation of Business
Transitional and final provisions
CHAPTER I – GENERAL PROVISIONS
In applying the provisions of the Law, the following terms and phrases shall have the meaning given unless it is specified to the contrary in the text.
The State - Republic of Somaliland.
The Minister - The Minister of Commerce.
The Ministry - The Ministry of Commerce.
The Company - A National or Foreign Insurance Company or any of its branches in the State .
The provisions of this Law shall apply to National and Foreign Companies, carrying on in the state the business of insurance or reinsurance, whether in part or in whole, as specified in this Law.
Insurance is a contract by which the insurer is obliged to pay to the insured or to the beneficiary as specified in the contract an amount or income or any financial compensation on the occurrence of the event or happening of the risk specified in the contract in consideration of the payment of premium or any other fiscal payment made by the insured to the insurer.
In applying the provisions of the Law, the insurance operations are divided into the following types:-
1. Life Insurance - This covers all insurance connected with human life and related hazards.
2. Endowment & Annuities - This covers insurance transactions based on the issuance of policies or documents or certificates etc. by which the Company is obliged to pay a certain amount or amounts at future date against the payment of a premium or regular periodical premiums.
3. Insurance of Accidents and Liability - This covers insurance of personal accidents, industrial injuries, motor vehicles, theft, engineering, civil liabilities, fidelity, insurance of staff and employees and cover for other risks which are usually included in the insurance of accidents and liabilities.
4. Fire Insurance - This covers, in particular, insurance against damage resulting from fire, explosions, natural phenomena and all types of disturbances usually connected with fire insurance.
5. Insurance against transport by road, sea and air - This covers the insurance of goods, movable freight and other risks, hulls, aeroplanes and its engines and accessories, and the hazards that may from its building, manufacture, usage, repair or launching, including damage to other parties, and other risks usually related to the insurance against transport by road, sea and air.
6. Other types of Insurance - This covers the insurance of all hazards which are not mentioned above.
An Insurance supreme Committee shall be formed and its meeting shall be regulated by Presidential order. Committee members will include a representative from the Ministries of Commerce, Finance and the Chamber of Commerce & Industry. The Committee shall be responsible for the general policy relating to insurance in the State and, it particular, to give opinion and to suggest procedures in connection with the following points:
1) General rules for the supervision of companies who are subject to the provisions of this law.
2) Risks to be insured compulsorily.
3) Principles concerning the investment of the reserves of the of the insurance companies.
4) Unified tariffs for certain types of insurance where these are in the public interest.
5) Other matters specified in this Law.
6) Matters which are referred to the Committee by the Minister.
7) To suggest the procedures to establish an Insurance Association which includes all insurance companies operating in the State. This Association should observe that the majority of its Executive Committee should be formed representatives of companies incorporated in the State.
The Committee, before giving an opinion as required by the Law, may inform the insurance companies’ representatives to submit their written observation in this connection.
The Committee must conduct a meeting at least once in a year to give its observation on the Annual Report prepared by the Ministry under Article (7) of this Law.
A supervisory Committee shall be formed, by a Ministerial order to supervise and consider matters submitted to it in accordance with provisions of this Law.
The insurance of property and liability thereof located in the State is not allowed to be insured abroad. Only companies who have registered their names in the Register in accordance with the provisions of this Law, are allowed to intermediate in insuring this property and liability.
Every June, the Ministry shall prepare a report on the insurance activities in the State for the preceding financial year. This report shall be referred each September to the Insurance supreme Committee specified in Article (4) of this in order to obtain its comments.
CHAPTER II – LICENSING OF INSURANCE COMPANIES
No company shall be formed to carry on the business of insurance in the State unless a permit is obtained from the Ministry, who shall have the right to grant or refuse such a license as it deems fit in the interest of the national economy, provided that the basic object of such a Company shall be the business of insurance.
Any foreign insurance company operating in the State must have a Somaliland Citizen Agent during the currency of this Law. Any branch of any insurance company operating in the State is considered as one Company when applying the provisions of this Law unless otherwise stated.
An insurance company established in the state shall be allowed to open a branch or branches provided the Ministry shall be notified within at least one month prior to the date of opening such branch or branches.
The Head Office of the company shall be responsible for all activities of all the branches belonging to it in the state and for the furnishing of all statements and information pertaining to them.
Insurance companies established in the State shall be in the form of public or private companies, all its shares shall be at par and at least 51% of its share capital shall always be held by Somaliland Citizens.
The paid up capital of any insurance company shall not be less than US $ 1,000,000 in all circumstances.
A person who establishes or administers any company governed by the provisions of this Law shall not be a person who has been convicted of crime or misdemeanour effecting his
Honour or fidelity and neither should a charge have been made against him nor a judgement declaring him bankrupt unless rehabilitated or an amnesty has been granted from the concerned authority.
The conditions specified in the previous paragraph shall apply to insurance Agents, survey ours and loss adjusters referred to in this Law and, in general, to any person approaching the public for transactions of insurance relating to the business governed by this Law. If any of these persons were a company, such provisions shall apply on all partners in the case of partnership and on the members of the Board of Directors or the Supervisory Council in the case of Funds Management Companies.
CHAPTER III- REGISTRATION OF INSURANCE COMPANIES.
No company who has obtained a licence of formation for carrying on business shall commence its insurance operation in the State unless it is recorded in the Register maintained by the Ministry.
Registration applications shall be submitted to the Ministry within a period not exceeding six months from the date of obtaining a licence, otherwise this shall be considered invalid. The Statements needed to be shown in the Register and records for recording registration applications shall be specifically by a Ministerial order.
The following documents shall be attached to the registration application:
1) Copy of the company’s Memorandum and Article of Association duly certified by the concerned authorities.
2) A certified declaration stating that the paid up share capital is not less than the limits specified in Article (12).
3) A statement showing the types of insurance transacted by the company established and a statement showing the general conditions of insurance cover and the technical bases if the type of insurance so requires.
4) Statement of the benefits, obligations and conditions of the insurance policies to be issued and, if the company is carrying on one of the operations specified in items (1) and (2) of Article (3) then, attached with this statement, shall be the basis of computing the premium together with a certificate from an Actuary of life assurance certifying that the basis, benefits and obligations of insurance operations carried out by the company in such types are proper and valid for execution.
5) For companies carrying on the business specified in items (1) and (2) of Article (3), a table of redemption values and reduction of covers shall be attached.
6) A specification in respect of every type of insurance policy to be issued by the company.
7) A certificate of deposit of the funds specified in Article (41) of this Law.
8) A certified instrument showing the name and address of the company’s manager and his authority to manage the company and to sign insurance policies. The concerned Authority responsible for registration shall be notified, within a period of 15days, of such a manager’s replacement or when his authority is altered. The applicant, within a period of 15days, of such a manager’s replacement or when his authority is altered. The applicant, when submitting the application to the concerned Authority, shall pay the fees specified in the relevant rules and regulations.
9) A Binding Declaration that adequate arrangements are in force or will be made, for the reinsurance of risks to be insured by the by the Company in the course of carrying on business, or that it is justifiable not to make arrangements for that purpose.
The Ministry, after confirming that conditions of registration are complied with, shall enter the company in the Register it maintains. The Ministry shall deliver to the applicant for the licence, a certificate of registration for the company indicating the approved types of insurance. Such certificates shall be published in the official gazette.
No company shall be allowed to carry on any type of insurance business unless it is licence to do so and any contract contrary to this provision shall be invalid but not against the interests of the insured persons and the beneficiaries unless their bad intention is established. The company’s Registration is renewable annually after paying the required fees and the renewal request should be forwarded one month before the expiry date of the registration each year.
The Ministry may refuse any registration application in respect of all or certain types of insurance stated in the application due to one of the following reasons:
1) Statements and documents attached to the application are incomplete.
2) Technical bases are not consistent with the premium for the operations carried out by the company in respect of items (1) and (2) of Article (3) and also compulsory insurance and other insurance imposed by law or regulations.
3) Non-compliance with the Law and regulations of the State.
4) If the commercial name selected by the company is identical or similar to another name to such a degree that it will cause confusion with the name of such company already registered.
The Ministry, instead of rejecting the application, may ask the applicant to complete or adjust the application in accordance with this Article provided that this be completed within a period not exceeding three months from the date of such notification by registered letter.
The applicant shall be notified of the decision for the rejection indicating the reasons. This shall be by registered letter within a period not exceeding (30) days from the date of application or the expiry date specified in the previous paragraph without the applicant completing the statements or altering the application. In all cases the applicant has no right to obtain of the fees paid for registration.
The registration applicant has the right to protest in writing against the resolution for the rejection within a period of (30) days from the date of his being notified of such decision. The protest shall be submitted to the Supervisory Committee shall decide within (30)days from the date of receiving such a protest and its decision in this connection shall be final.
The company shall notify the Ministry of every change or alteration occurring in the statements shown in the application for registration or the documents attached thereto, within a period of 30days from the date of such change or alteration. Such notification shall be accompanied by a certificate supporting the document duly certified from the concerned authorities.
If the alterations and change are dealing with the bases insurance operations shown in the items (1) and (2) of Article (3) or concerning the benefits, restrictions and conditions authorised by the insurance policies related to such dealings, the company must provide, together with the notification, a certificate from a registered Actuary in life assurance indicating that the bases’ benefits and restrictions and conditions are proper and valid for executive.
A written certificate should be obtained from the Ministry prior to putting those alterations into operation.
The Ministry has a right to reject alterations or changes in the application but such decision shall be notified to the applicant by a registered letter with the reasons, within one month from the date of submitting the notification of such alterations or changes to the Ministry.
The Company may protest against the rejection concerning the alterations or change and such protest shall be made in writing within (30) days from the date of its receiving notification of the rejection decision. The protest shall be submitted to the Supervisory Committee specified in Article (5) of this Law and the said Committee shall consider the protest within (30)days from the date of its submission. Its decision in this connection shall be final.
Deletion of registration by the Minister shall be made in the following;
1) If the company ceased its operation in the State and released its fund in accordance with the provisions of Article (68).
2) If a resolution is passed approving the transfer of the contracts entered into by the company in respect of all transactions carried out in the State and in accordance with the Article (65-66) of this Law.
3) If a judgement has been issued declaring the company bankrupt or to be liquidated
4) If it is discovered that the registration of the company was not proper.
Before issuing the decision for the deletion, the Ministry shall notify the company by a registered letter that it should submit its defence in writing within (30)days from the date of notification.
If the company does not submit its defence within period specified in the previous paragraph or if the Ministry is not convinced by the company’s defence the matter will be referred to the Minister who will issue his order on deletion together with the reasons.
The Ministry shall inform the company of such order by a registered letter.
The Ministerial order may be for the deletion in whole or in part and partial deletion shall only apply to operations stated in the deletion resolution. Such order shall be effective only after it is final, either through the company not protesting or after a rejection of such a protest.
The company may protest against the Ministerial order to delete its registration to the supervisory Committee referred to in Article (5) of this Law within (30)days from the date of its receiving notification of such order.
The Supervisory Committee shall consider such protest within 30days of submission and any order issued in this connection shall be final.
After the final order concerning the deletion of the registration of the
Company, the company shall cease operation in the types of insurance mentioned in the deletion order. The Ministry may permit the company to continue dealing in outstanding transactions at the time of deletion, in accordance with the conditions specified by the Ministry. The Ministry may decide also to liquidate the activity of the company.
The liquidation shall be carried out in accordance with the rules decided upon by the supervisory Committee and under the
Supervision of 3 members appointed by the Minister. In all cases, the company against which a final order is issued to delete its registration shall deal with its funds or guarantees submitted only after fulfilling and completing the procedures specified in this Law.
The Minister may suspend a company from accepting new a period not exceeding 6 months. This suspension should not affect the company’s obligation towards its policyholders prior to this order in the following cases:
1) If the company is not maintaining in the State the funds specified in Articles (44) and (45) of this Law.
2) If the paid up capital is reduced below the limits specified in Article (12) of this Law.
3) If it fails to comply with a final judgement issued by any Court of the State.
4) If it fails to submit its books for verification by the Ministry in accordance with the provisions of this Law or if it refuses to submit the statements required by the provisions of this Law.
5) If it is proved as a result of the verification referred to in this Law that the rights of the policyholders of the company are in jeopardy or that the company is unable to meet its commitments.
6) If it is proved that the company has not complied with its bye-laws, the provisions of this law or the rules & regulations thereto.
The company shall be notified of the resolution to suspend it. In cases where the company has not rectified the matters causing the suspension within the specified period of suspension, the Minister may grant the company an additional period within the maximum limit mentioned in this Article-suspension continuing, or will issue an order to delete the company from registration in accordance with the provisions of Article (22), (23) and (24).
The company shall state on all papers, documents, publications, advertisements, booklets, signboards, printed matter and in general on all matter distributed to the public, the number and date of registration in the Insurance Companies Register together with the reference that the company is subject to this Law.
It shall not be permitted to exhibit the subscribed share capital unless the paid up capital is indicated with it.
It is prohibited for any company in the State to publish any of the statement required to be submitted in accordance with the provisions
Of this Law unless it is in agreement with the copy submitted to the Ministry. It shall be permitted to publish identical extracts to the original statements submitted to the Ministry.
Any interested person has the right to have sight of the statements recorded in the Register of Insurance Companies. He also has the right to have sight of the orders made by the Ministry in connection with the company and to obtain copies or extracts of such statements or documents after paying the fees specified in the relevant rules & regulations.
The company in compliance with the wishes of its policyholders shall let them have sight of all statements connected with the respective insurance policies and furnish a copy of such statements if required by them, against payment of fees specified in the relevant rules & regulations.
CHAPTER IV – INSURANCE AGENTS
In applying the provisions of this Law, an Insurance Agent is the one who intermediates or offers or executes a contract of insurance on behalf of an insurance company registered in the Insurance Companies Register in the State in consideration of a salary bonus or commission.
Staff of insurance companies and Insurance Agents are not considered as Agents in applying the provisions of this Law.
An Agent shall not commence his business unless his name is recorded in the Register maintained by the Ministry who shall furnish the Agent with a certificate of registration and a copy thereof to the concerned authority. Such registration shall be valid for a period of one year, renewable for similar periods.
The certificate show the Agent’s name, his last address, Registration Number and types of insurance he is authorised to transact.
The Agent shall submit his renewal application in the same manner as the registration application has been made, (30)days prior to the expiry of the period mentioned in the previous paragraph, failing which the Agent’s name shall be deleted.
Applications for registration and renewal shall be made in accordance with the terms and conditions specified in the relevant rules & regulations and after paying the fee specified in such rules & regulations.
A person registered in the Register of an Agent shall:
1) Be a Somaliland Citizen.
2) Be of sound character and conduct and shall be one who has not been convicted for a crime or misdemeanour affecting his honour or fidelity unless such a person has been rehabilitated.
3) Not be less than 21yaers of age and shall be in sound mind.
4) Not be adjudged of bankruptcy or he has been rehabilitated.
5) Have a permanent place of business.
If the Agent is a company then it must be established in the State and 100% of its capital must be held by Somaliland citizens.
All terms and conditions requested in article (32) must be applied to all members if the Agency takes the from of a partnership.
If the Agent fails to comply with any of the conditions in the pervious two Article his name shall be deleted from the Register.
An insurance Agent is not allowed to act on behalf of an insurance company unless he has special authority, the terms of which are agreed between the two parties.
Insurance companies shall maintain a special register of the name and address of each Agent dealing in insurance transactions on their behalf and insurance companies shall not be permitted to employ Insurance Agent whose names are not recorded in the Ministry’s Register.
CHAPETER V- SURVEYORS AND LOSS ADJUSTERS
According to the provisions of this Law, loss adjuster means any person who surveys and assesses damage relating to insurance.
Such surveyor and loss adjuster shall not be permitted to carry on his business unless registered in the Register maintained by the Ministry. The conditions required of a person who may be included in the Register shall be specified by a Ministerial order after consulting the Insurance Supreme Committee.
Insurance companies shall not use the services of surveyors and loss adjusters who are not entered in the Register except in the cases where special technical expertise is required and in such cases they shall notify the Ministry.
CHAPTER VI – OBLIGATIONS OF INSURANCE COMPANIES
SECTION 1- REINSURANCE
The Minister may, if deemed necessary in the interest of the general public, enquire insurance companies registered in accordance with this Law, to reinsure part of their direct insurance business conducted in the state with national reinsurance companies operating in the State, which shall be specified by a Ministerial order.
However, Reinsurance shall be done in accordance with the terms and conditions specified by a Ministerial order after consulting with the Insurance Supreme Committee.
The provisions of this Article shall not apply to transactions relating to Endowment & annuities specified in item (2) of Article (3). No reinsurance companies shall be allowed to be established unless a Presidential Decree is obtained, suggested by the Minister and agreed by the Cabinet.
The extent of dealings undertaken by a reinsurance company for an insurance in respect of various operations specified in the previous Article and the provisions of such dealing and the timetable for submitting the concerned statements and accounts related to such dealings, shall be determined by the Minister after consultation with the Insurance Supreme Committee.
The decision referred to in the previous paragraph may specify the reinsurance commission and profit commission payable by the reinsurance company to the insurance company in respect of reinsurance transactions, if deemed to be in the public interest after consultation with the Insurance Supreme Committee.
The provisions of this Article shall not apply to order reinsurance transactions carried out by a reinsurance company in cases not mentioned in Article (39).
SECTION II – FUNDS OF INSURANCE COMPANIES
Insurance companies shall be required to deposit with any bank operating in the State for fulfilment of its obligations:
1) US $ 500,000/- in the case of a company carrying on the types of insurance specified in items (1) and (2) of Article (3) of this Law.
2) US $ 100,000/- on each branch mentioned in Article (3) in case of a company carrying on other types insurance, but not exceeding US $ 200,000/- in the aggregate.
The Minister may increase the sums under (1 & 2) above after consultation with the Insurance Supreme Committee.
The deposit shall take the from of cash or its equivalent in shares or bonds acceptable to the Ministry or mortgage of real estate in the State. The deposit will be deposited in a bank in the State to the order of the Minister and the interest on the deposit shall be allocated to the insurance company. The Minister may change the form of deposit in whole or in part to any other forms of deposit, but in all cases this shall not be less in value than what has been stated in the Article.
Companies shall not be allowed to use the deposit to meet a debt resulting from insurance business carried out by the company or for any other reason, unless written permission from the Minister or whomsoever is authorised or by a Court.
The Ministry may require the company to make good the reduction in the value of the deposit, if any occurs, within 60days.
The bank in which the cash is deposited is not allowed to use it unless a Court decision is obtained or written approval obtained from the Minister.
Real Estate office must be notified by a written approval from the Minister when lifting the standing mortgage if there is any on the property belonging to the insurance company.
Companies carrying on the business of insurance of the types specified in items(1) and (2) of Article (3) shall maintain within the State, funds equivalent at least to the accounting reserves relating to the business contracted or executed in the state.
The Minister after consulting with the Insurance Supreme Committee may reduce this reserve but to a level not less than 40% of the accounting reserves.
The funds outlined earlier in this Article should be kept separate from the funds related to other types of insurance and in computation of the aforesaid reserve the deposit specified in item (1) of Article (41) of this Law shall be taken into consideration so as to adopt the higher amount.
Companies carrying on the business of insurance specified in item (5) of Article (3), shall maintain within the State, funds amounting to not less than 25% of the aggregate of the premium received in the preceding year.
Companies carrying on the business of insurance specified in items (3),(4) and (6) of Article (3) shall maintain within the State, funds amounting to not less than 40% of the aggregate of the premium received in the preceding year. When calculating the reserve stated in this Article, the deposit specified in item (2) of Article (41) of this Law shall be taken into consideration so as adopt whichever is the higher.
SECTION – III SOLVENCY MARGIN
An insurance company has to maintain a margin of solvency required by this law as follows:
a) The assets of the company, being the company which carries on general insurance business, must exceed the amount of its liabilities by whichever is the greater of the following amounts namely:
(1) US $ 250,000/-
(2) Greater of:
(i) 18% of Gross Premius X Net Claim Incurred
Gross Claim Incurred
(ii) 26% of average Gross Claims
Incurred preceding Three years X Net Claim Incurred
Gross Claim Incurred
b) For an insurance company which carries on the life insurance business its assets must exceed by US $ 500,000/- its liabilities by virtue of life insurance policies, and
c) For an insurance company which carries on both general and life insurance business in addition to the provisions of paragraph (b) of this article, the value of its assets has to exceed the amount of its general insurance liabilities by the relevant amount as specified in clause (a) above.
(1) For the purpose of article 46,
a) In computing the amount of the liabilities in respect of share capital shall not be taken into account; and
b) The general premium income of a company in any year shall be taken to be the net amount, after deduction of any premiums paid by the company for reinsurance, of the premiums received by the company in that year in respect of all insurance business other than long terms insurance business.
(2) The value of any assets and the amount of any liabilities shall subject to paragraph (3) below, be determined in accordance with any applicable regulations made for valuation of assets and liabilities.
(3) For the purpose of the article 46 (b) of the law the amount of the liabilities of the long term insurance business of a company at any time shall be taken to be:
a) An amount equal to the total amount at the time standing to the credit of the fund or funds maintained by the company in respect of its long term insurance business, or
b) The amount of those liabilities at the time as determined in accordance with any applicable valuation regulations, whichever is the greater.
1) The calculation of the margin of solvency shall be made every year:
a) In such a form and singed by such persons as may be prescribed by the regulations.
b) Containing such a statement with respect to the assets and liabilities of the company as may be so prescribed.
2) If an insurance company fails to comply with the regulations so made, the value of its assets shall be derived, until contrary is proved, not to exceed amount of its liabilities by the amount required in the 46 of this law.
SECTION IV – RECORDS AND BOOKS OF ACCOUNTS OF INSURANCE COMPANIES
In cases where the company carries out more than one type of insurance, separate accounts shall be maintained in respect of each type.
The Minister, after consulting the Insurance Supreme Committee, may require that the company, in addition, shall maintain separate accounts in respect of one or more category of insurance transactions under one type of insurance.
Any annual income and expenditure which cannot be allocated to a certain type or types of insurance shall be split over all the types of insurance carried out by the company.
The company shall maintain a special register, in respect of each type of insurance, to record all insurance policies issued together with the name and place of residence of the insured, premium received, date of each policy, alterations made transfer of ownership.
The company shall maintain a claim register for each type of insurance. The register shall include details of all claims received mentioning date of each claim together with the name and address of the applicant. In the event of a claim being rejected, then the reason and the date of the refusal shall be given.
The financial year of insurance companies shall commence on Ist January of each year and end on 31st December of the same year. However, the first financial year shall commence from the date of establishment and end on 31st December of the next year.
The Company shall submit to the Ministry, the following:
1. Annual balance sheet in respect of its operations in each branch of insurance certified by auditors.
2. Profit and loss account.
3. Statement of revenue and expenditure, reserve for unexpired risks, additional technical reserve and provision for outstanding claims in respect of each type of insurance.
4. Detailed report in respect of insurance business carried out during the year.
5. Statement of funds retained within the State in accordance with the provisions of this Law, supported with documents as required by the Ministry or the concerned Authority.
All such statements and documents shall be signed by the company’s Chairman and a member of the Board or by the Manager if the company is a branch of foreign company or an agent for it.
Each company must have its accounts audited every year by an auditor who has complied with the conditions specified by the Ministry and who is registered in the Register of Public Accountants and Auditors.
An auditor shall not a member of the Board of Directors of the company or be one of its managers or employees.
The company shall provide the auditor with all books, documents and statements which, in his opinion, are deemed necessary to carry out his duties.
The auditor shall verify that the balance sheet of the company, profit and loss account, statement of revenue and expenditure, unexpired risks and reserves, and funds which are required to be maintained within the State, are prepared in a proper manner and represent properly the financial position of the company.
The estimation of unexpired risks of the companies carrying on insurance transactions specified in items (1) and (2) of Article (3) shall be computed by an Actuary of Life Insurance.
The company shall submit to the Ministry the statement and the information relating to instruments and documents required to be kept by Law and it shall also submit all explanations required in respect of complaints received by the Ministry from policyholders or beneficiaries or others in connection with insurance transactions carried out by the company within the state.
The Ministry may inspect the business of the company if it has reason to believe that the rights of the policyholders are likely to be in jeopardy or that the company is unable to meet its obligations or contravenes the provisions of this Law. In case an expert other than the Government official staff is appointed to carry out the inspection, the company shall bear his fees.
SECTION V – PROVISION CONERNING LIFE AND EDOWMENT AND ANNUITIES
Companies which carry on the business of the types of insurance mentioned in items (1) and (2) of Article (3) shall not be allowed to differentiate between one policy and another of the same types as regards premium or profit distribution to a policyholder or with regard to any other items unless such differentiation has resulted from difference in life expectation with regard to policies containing element of life, with the exception of:
1. Reinsurance policies.
2. Insurance polices on amounts enjoying a certain reduction in accordance with the tables of fees notified to the Ministry.
3. Insurance policies with special conditions on the life of the members of one family or group of individuals linked in one profession or on business or any other social relationship.
The Ministry after consultation with the Insurance Supreme Committee may license the company – if it so request – to issue policies with reductions on the normal premium, if reasons are well justified.
Companies which carry on the type of insurance specified in items (1) and (2) of Article (3) of this Law, shall verify the financial position of each type of insurance carried out by them and shall have evaluated unexpired risks in respect of each type at least once every three years, by a registered Actuary in Life Insurance.
Such evaluation shall cover all insurance transactions conducted by the company within the State and abroad, separately.
If the company is a foreign company, the evaluation shall be restricted to the transactions conducted within the State or transactions to be executed therein.
The evaluation referred to in previous Article shall be carried out whenever the company wishes to evaluate its financial position in order to determine the percentage of profit to be distributed to shareholders or whenever it wishes to advertise its financial position.
The Ministry, after approval by the Supervisory Committee, may require such evaluation at any time before the expiry of the three years provided that at least one year has elapsed since the date of the last evaluation.
The relevant & regulations shall specify the statements which shall be contained in the report of the Actuary, consequent to the verification and evaluation specified in the preceding two Articles.
The company shall send a copy of the Actuary’s report showing the result of the evaluation referred to in the Article (59) and (61) to the Ministry within six months from the expiry of the period covered by the evaluation, accompanied by the following:
1. A statement of the valid insurance policies contracted by the company within the State or abroad on the date of evaluation.
If the company is a foreign company, such statement shall be restricted to the policies contracted within the State or those to be executed therein.
2. A declaration by those responsible for managing the company that all the information as required by the Actuary has been submitted to him so as to enable him to give a proper report.
By a Ministerial order the company may be granted an additional period after the expiry of the six months in which to submit such report, provided that such extension shall not be more than three months.
If the Ministry finds that the Actuary’s report does indicate the correct financial position of the company, it shall order a revaluation, at the company’s expense, by a registered Life Insurance Actuary selected for this purpose.
Companies which carry on transaction of life, endowment and annuities insurance, shall not deduct, directly or indirectly, any part of its funds earmarked against its obligations arising from such insurance, for distribution in the form of profit to the shareholders or for payment of any amount beyond its obligations according to issued insurance policies, and such distribution of profit shall be restricted to in Article (59).
In applying the provisions of this Article, the company’s funds within the State and abroad shall be taken together, provided that the provisions of Article (41) shall not be contravened.
Companies carrying out insurance transactions in respect of life, endowment and annuities insurance, shall be prohibited from issuing savings bonds for a period exceeding 30 years. If the period of the bond is 25 years or more, the surrender value of the policies after 25 years shall not be less than the value of the accounting reserve.
The premium contracted by the holders of savings bonds shall be of equal amounts or on a deceasing scale.
Saving bonds shall contain provision for rescinding the bonds by the company if there is any delay in paying premium, provided that the contract shall not be rescinded before the expiry of one month from the date when the premium falls due. In the case of the nominal bonds, the contract may be rescinded only from the date of notifying the holder of the bond by a register letter.
Also such bonds shall specify the beneficiaries on the death of the holder of the bond without imposing any additional amount or new conditions.
Other provisions to be included in savings bonds shall be specified by a Ministerial order after consulting the Insurance Supreme Committee.
If the company which carries on the insurance business of life endowment and annuities becomes bankrupt or is liquidated, the amounts due to each policyholder in respect of policies not expired shall be evaluated to be equivalent to the accounting reserve on the day it is adjudged bankrupt or on the date of liquidation, computed on the basis of technical rules of premium tariff prevailing on the date of issuing the policy.
CHAPTER VII – TRANSFEER OF POLICIES, AMALGAMATION AND CESSATION OF BUSINESS
Any company desirous of transferring its policies with the rights and obligations attached thereto in respect of all or part of its insurance transactions carried on within the State to another company or companies, shall submit an application to the Ministry in accordance with the terms and conditions specified by a Ministerial order.
The application shall be published in the official gazette and in two daily newspapers in the State.
Such an application shall contain an invitation to policyholder and other concerned persons to submit their objections against the transfer, to the Ministry, within a period not exceeding three months from the date of publication.
The Ministry shall issue a Ministerial order agreeing to the transfer if interested parties do not object to this action during the specified period referred to in the previous Article.
Such resolution shall be published in the official gazette within one month from the date of issue and it may be used as evidence by the insureds and beneficiaries of such insurance policies contracted by the company in the State and also by its creditors.
In such case the funds that the company may have in the State shall be transferred, provided that the provisions relating to the transfer of ownership and the assignment of funds shall be followed and the amount of such transferred funds shall be exempted from registration fees and fees for safe keeping imposed by laws relating to transfer of ownership and assignment of funds. If a protest is submitted within the specified period, the application shall only be considered after agreement is reached between the concerned parties and the final judgement is made in this connection. However, the Ministry may issue an order approving the transfer, provided that it shall receive from the company an amount equivalent to its obligations towards those making protest including expenses required to maintain any of the company’s assets.
The provisions relating to the transfer specified in the preceding Articles shall apply if a company decides to cease its operations in the State in respect of one or more types of insurances and also, if it is desirous of releasing its funds required to be maintained with the State in respect of each type or types in which the company is desirous to cease operations or if the company has transferred its policies to another in the manner specified in the preceding two Article, it can do so only after submitting evidence that it ahs met all the obligations resulting from such action.
The provisions specified in Article (68 and (69) are applicable in the case where two or more companies wish to amalgamate into one company after each company has submitted a report, duly authenticated by a Chartered Accountant and an Insurance Actuary,
Specifying that the intended amalgamation will not prejudice the rights of the Policyholders as well as the rights of other parties in general.
CHAPTER VIII – PENALTIES
A penalty of imprisonment of not less than one month and not more than one year and a fine of not less than US $ 500/- and not more than US $ 5,000/- either of these two penalties, shall be imposed on any member of a Board of Directors or a Manager or Agent of an insurance company and, in general, any person who intermediates or offers or executes a contract of insurance before registration of the Company in the Insurance Companies Register in accordance with the provisions of this Law.
In addition, if a person continue his insurance activities after an order of deletion is issued prohibiting him from doing business or, if anyone transacts insurance in classes other than the types for which a permit was issued, then the same penalties outlined above shall be applicable.
A penalty of imprisonment for a period of not less than one month and a fine of not less than US $ 50/- and not more than US $ 1,000/- or either of these penalties , shall be imposed on any Insurance Agent who commences business on behalf of an insurance company registered under the provisions of this Law if his name is not in the Register Insurance Agents.
Likewise, the above mentioned penalty shall be applicable to Surveyors and loss Adjusters if they commence business before they have registered their names in the appropriate Register.
A penalty of not less than US $ 100/- and not more than US $500/- shall be imposed on anyone who contravenes the provisions of Article (29), (36) and (38) of this Law.
The penalties specified in Article (72), (73) and (74) of this Law shall be doubled if the default is repeated.
An amount not less than US $ 50/- and not more than US $ 500/- shall be imposed as a fine if any delay occurs from the specified times in submitting the statements required in accordance with the provisions of this Law. The same penalty shall apply to any person refusing to submit the books, papers and documents to the representatives of the Ministry, who shall have the right to inspect such books, papers and documents in accordance with the provisions of this Law and the rules & regulation.
In addition, it may be permitted to pass a judgement in respect of the preceding two cases levying a heavier fine and such judgement shall specify the amount in respect of each day of delay or refusal, provided that the fine shall not be more than US $ 100/- per day.
Any person who contracts or offers, in the name of a registered company, life insurance policies with terms and conditions other than those notified to the Ministry, shall be fined not less than US $ 100/ and not more than US $ 1,000/-.
The same penalty shall apply in respect of any person who defaults with regard to the provisions of Articles (13), (19), (26),(27),(50)and (57) of this law.
Without contravening any of the provisions of penalty specified in the Penal Code or any other Law, any person who makes a declaration deliberately concealing facts in statements or in minutes or in any other papers which are required to be submitted to the Ministry or which are to be exhibited to the public, shall be subjected to penalty in respect of each with imprisonment not less than three months and not exceeding three years or with a fine not less than US $ 200/- and not more than US $ 1,000/- or either of these two penalties.
CHAPTER IX – TRANSITIONAL AND FINAL PROVISIONS
With the exception of those cases where the Law has fixed certain dates to be executed, insurance companies, insurance agents, surveyors and loss adjusters operating in the State at the time of this Law becoming operative shall be granted a period of one year from the effective date of this Law, to comply with its provisions.
The Ministry may extend such a period for another year, if deemed necessary, after consulting with the Insurance Supreme Committee.
All documents and statements required to be submitted in accordance with the provisions of this Law shall be written in the Somali language. If it is written in a foreign language then it must be translated into Somali and be duly certified by the proper authority.
The Minster may grant exemption of this condition in respect of certain documents.
The staff, deputed by the Ministry in applying this Law, shall have judicial power to prove contraventions of this Law or to the relevant rule and regulations thereto.
Insurance companies, insurance agents and loss adjusters shall be required to submit to the staff mentioned, all books, records and documents required for their inspection in order to enable them to carry out their duties provided that this shall be in the company’s premises and during official working hours.
The Minister after consulting with the Insurance Supreme Committee may issue rules and regulations concerning Life Actuaries.
Insurance companies and insurance agents established in the State at the time of this Law becoming operative have to register themselves at the Ministry in the Insurance Companies Register or the Insurance Agents Register during a period of not more than six months.
To execute the provisions of this Law the Minister will issue an order fixing the required fees which should not exceedUS$ 300/- for each case.
This Law cancels any pervious Law contradicting the provisions of this Law.
The Minister shall issue orders and relevant rules & regulations for the execution of the provisions of this Law.
This law shall be published in the official gazette and shall be effective after three months from the date of its publication.