Insurance Act

This section says the Act may be cited as the Insurance Act.

This section defines terms used in the Act.

This Act’s main purpose is to improve the safety, soundness, and prudent management of insurers and others in the insurance industry in Malawi, while protecting policyholders and promoting high standards of conduct.

This section says the Act applies to the insurance industry as well as the Financial Services Act.

Rules on licensing and registration applications in the Financial Services Act also apply to this Act, with necessary changes.

Insurance business in Malawi is categorized as life insurance or general insurance, and the Registrar must issue directives dividing each category into classes and sub-classes.

A person must not carry on insurance business in Malawi unless licensed as an insurer for that category, and must not use “assure” wording or act as if authorized without meeting the licensing rule; the Registrar’s approval is needed for the name-use rule.

This section sets the criteria the Registrar must be satisfied of before licensing an insurer, including company status, reinsurance, no disqualification, and business limits.

The Registrar must refuse a licence application if specified refusal grounds are met, and must tell the applicant of a refusal decision within 90 days after receiving a complete application.

An insurer may not start business until the Registrar approves commencement.

The Registrar may suspend or revoke an insurer’s licence if specified grounds are met.

The Registrar must revoke an insurer’s licence if satisfied the insurer has stopped carrying on insurance business in Malawi.

An insurer is treated as having sufficient solvency margin for insurance business if it meets solvency conditions in the Registrar’s directives.

Part III applies to insurers.

Insurers must maintain a principal office in Malawi, appoint a principal officer there, and notify the Registrar about the office and relevant changes.

An insurer may reinsure its risks with a suitable reinsurer in the ordinary course of business, and the Registrar may set conditions on reinsurance arrangements and the extent of reinsurance.

Life insurers and general insurers may only reinsure the relevant Malawi business with the specified type of reinsurer, unless the Registrar approves the contract and terms in writing.

Insurance business, other than reinsurance, must not be placed outside Malawi unless the Registrar approves it in writing.

Directors of an insurer must present specified annual financial statements to shareholders at each annual meeting and approve the statements.

If shareholders and policyholders require it, the insurer’s external auditor must audit the financial-statement report and give an opinion on whether the financial statements are fairly presented.

An external reinsurer must have its Malawi reinsurance business financial statements audited by the head office auditors, who must give an opinion on fair presentation using the head office country’s auditing and accounting standards.

The Registrar may require an insurer to appoint an actuary to value liabilities, and the appointed actuary must comply with section 25 as applied here.

Part IV applies to life insurers.

A life insurer that also does other business must keep separate books for its life insurance business, keep life insurance receipts and payments in the life insurance funds, and not use those funds for non-life-insurance purposes.

Life insurers must appoint an actuary, and the actuary must perform valuations and reporting duties under the Registrar’s directives.

A life insurer’s holding-company shares in its life insurance funds may be treated as held in trust for policyholders, subject to Registrar-imposed conditions, and the insurer cannot vote those shares.

Insurance brokers may operate in Malawi only if licensed; unlicensed operation is an offence with a fine and possible imprisonment.

Insurance brokers must maintain professional indemnity and fidelity insurance policies, and the policies must meet any liability limits set by the Registrar’s directives.

If an insurer ends a broker’s appointment, the insurer must notify the Registrar and the public, and the broker must stop selling policies for that insurer immediately.

The Registrar must not revoke an insurance broker’s licence at the broker’s request unless the broker’s business liabilities are settled or otherwise provided for in a way the Registrar accepts.

An insurance broker must treat certain funds received for insurers from the public as trust funds, and must not assign, pledge, or otherwise charge those trust funds.

The Registrar’s directives may deal with trust funds under section 31 and insurance brokers’ trust accounts.

A person must not carry on business as an agent for insurance brokers unless licensed under this Part.

The Registrar must grant an insurance-agent licence for a specified insurance broker if the stated conditions are met.

No person may claim to the public that they are an agent of an insurance broker unless they are licensed and appointed for that broker.

If an insurance broker’s agent appointment ends, the insurer must notify the Registrar, the licence is automatically suspended, and the agent must stop operating for that broker.

An insurance broker must, within 7 days after an agency is terminated, notify the public and tell the Registrar.

The Registrar may suspend or revoke an insurance agent’s broker licence if continuing it would be against the public or policyholder’s interest, but cannot do so at the agent’s request unless the agent’s liabilities are met or suitable arrangements are made.

A person must be licensed under this Part to carry on the business of an insurance agent.

A licence for an insurance agent of a specified insurer must be granted if the listed conditions are met.

No person may publicly say they are an insurance agent unless they are licensed and appointed by the insurer, with the appointment still in force.

If an insurance agent’s appointment ends, the insurer must notify the Registrar, the agent’s licence is automatically suspended, and the agent must stop acting for that insurer.

An insurance agent is treated as the insurer’s agent for premium payment or receipt matters until the agency agreement ends.

The Registrar may suspend or revoke an insurance agent’s licence if continuing it would be contrary to the public or policyholder’s interest.

This provision defines when the “prescribed credit period” starts and says it ends as specified in the insurer agreement.

Insurance brokers or agents who collect premiums for an insurer must close their premium records within the prescribed credit period, pay the premiums to the insurer no later than 30 days after receipt from the policyholder, and give the insurer a detailed payment bordereau at the same time.

A person must not carry on loss assessor/adjustor or claims settling agent business unless licensed under this Part.

The Registrar may grant a licence to carry on the business of loss assessor/adjustor or claims settling agent if the applicant meets listed qualification, experience, character, business-arrangement, insolvency, criminal-record, and insurer-confirmation conditions.

An insurer’s board must set and monitor investment and lending policies, standards, and processes, and the insurer must implement them.

An insurer needs the Registrar’s prior written approval before making certain large investments, unless the Registrar does not respond within 21 days after all required information is provided.

An insurer may acquire all or part of an ownership interest in an entity or its affiliates after a loan default, but it must undertake to the Registrar to divest that ownership interest within two years.

An insurer’s assets must be invested in Malawi, subject to the Act, the insurer’s articles, and other reasonable rules, while giving sufficient regard to liquidity, return, and security.

The Registrar may issue directives setting prudential limits for insurers’ consumer and commercial lending.

The Registrar may order an insurer to dispose of loans or investments that were made or acquired in breach of the Act or directives.

Certain acquisitions or control arrangements involving an insurer need prior approval from the Registrar.

The Registrar must not approve an insurer’s transfer or amalgamation if at least one fifth of the affected policyholders dissent.

For insurance companies and insurance brokers that are companies, the winding-up rules in the Companies Act and Financial Services Act apply, except the Companies Act rules for creditors’ and members’ voluntary winding-up do not apply.

The Registrar must not approve an insurer’s winding-up until policyholders’ benefits are paid or policyholders are transferred to another insurer under an approved scheme.

In a winding-up, insurer records can count as prima facie evidence of an insured person’s rights, despite anything contrary in the Companies Act or Bankruptcy Act.

When an insurer is wound up, its assets must be distributed in a set order after secured and preferred claims are paid.

Unclaimed money left after an insurer is wound up must be deposited in the Bankruptcy Estates Accounts, at the prescribed bank or with the Accountant General, and treated as unclaimed and undistributed funds.

Insurers, insurance brokers, and insurance agents must get the Registrar’s prior written approval for several major corporate actions.

Some people are disqualified from being appointed as directors of an insurer.

An insurer must not appoint an unlicensed person as an agent or broker unless the Registrar authorizes it.

Insurers must pay covered claims within 14 days after a claim discharge certificate is signed.

Process against a licensed insurer may be served at the insurer’s principal office in Malawi, or at the Registrar’s office if the insurer has no principal office there.

The owner of a local policy may enforce rights under the policy against the insurer in a competent court in Malawi.

The Registrar must issue an annual certificate to a requesting insurer that has deposited approved securities, and the insurer may substitute approved securities of like face value.

An insurer must provide required documents to the Registrar in the specified signed form and with the required number of copies, unless the Registrar directs otherwise.

Insurers must not quote insurance contracts in foreign currency unless the exchange control authorities approve the transaction in writing.

An insurer, insurance broker, or agent’s failure to comply with the Act does not invalidate the policy.

An insurer must not issue a policy unless the printed provisions are in clear typeface and in letters of uniform size of at least ten points.

A person must not cause someone else to enter, or apply to enter, an insurance contract with an unlicensed insurer, unless the subsection (3) conditions are met.

References to certain insurance-related companies in other written laws are to be read as references to a company carrying on insurance business under this Act, where the context requires.

If this Act conflicts with or adds to the Companies Act, this Act applies.

This section makes several failures and improper acts offences, including contravening the Act, regulations, or directives, giving an unfair preference by insurer personnel, failing to comply with section 10, and failing to take reasonable steps to keep reports accurate and complete.

This section sets penalties for offences under the Act, including fines, imprisonment, administrative penalties, and extra monetary penalties linked to gains from the offence.

The Minister may make regulations, after consulting the Registrar, and people who contravene those regulations may be liable to penalties under the Financial Services Act.

Insurers and related insurance intermediaries must comply with the Act when it takes effect; the Registrar may grant transition periods and issue directives on listed compliance matters.

The Insurance Act is repealed, and some existing subsidiary legislation and agreements continue under savings rules.