The regulation of the Insurance Industry: An assessment of the Pensions and Insurance Authourity(PIA)
Mulenga, Chisopa Sipho Ngosa
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The modem democracy recognizes that there must be freedom. Friedman a renowned author in jurisprudence postulates these freedoms of the individual as being the freedom of contract, freedom of labour and association, freedom of property and freedom of enterprise. The freedom of enterprise is the cornerstone of the freedom of personal development. It is because of this freedom that individuals can enter into areas of business such as insurance not only to provide a service but to make a profit too.The business of insurance is ordinarily deemed to be quasi public in nature impressed with a public use so that its regulation, supervision and control are authorized and required to protect the general public in safeguarding the interests of all concerned. The liberalization of the economy in Zambia has seen the emergence of new market players in all sectors of the economy that were previously state dominated. Insurance is no exception. In 1970 a government owned monopoly insurer, Zambia State Insurance Company (ZSIC) was formed obliging the then twenty-six foreign insurers to transfer their assets to ZSIC. Until 1992 ZSIC remained the only organization permitted to transact insurance business. Presently, there are more than ten players in each faction of insurance players being insurers, brokers, assessors, claims agents and loss adjustors. The law is the best regulatory tool.The Insurance Act was updated in 1997. No regulations were issued in respect of the current Act but were issued in respect of the now repealed Insurance Act of 1968. The net results of not having formally updated regulations is that firstly, insurance companies do not have access to a comprehensive set of rules and procedures being applied and secondly, the regulations being applied are not complete. The duties of the Registrar of Insurance are outlined in the Insurance Act but there is lack of a supportive structure in form of a separate statutory entity.The International Association of Insurance Supervisors (lAIS) was established in 1994 and comprises insurance supervisory authorities of more than a hundred jurisdictions. The most important function of the organization is to set international standards for insurance regulation and supervision. The lAIS sets out principles that are fundamental to insurance supervision. These principles identify key areas in which the supervisor should have control. The use of these international standards ensures that Zambia keeps up with the latest developments in the international arena in terms of the financial sector.The work presented is information from and about the regulatory regime for insurance in Zambia and in particular the Pensions and Insurance Authority. It was gathered mainly by field research and internet sources.
- Law