Insurance & Reinsurance
In this legal briefing we focus on the recent Circular on “Conditions for Dealing with Foreign Reinsurers and Reinsurance Brokers” issued by the Tanzania Insurance Regulatory Authority.
On 11th December 2017, the Tanzania Insurance Regulatory Authority (TIRA) issued Circular No.055/2017 Conditions for Dealing with Foreign Reinsurers and Reinsurance Brokers (the Circular) with a view to revisiting the existing requirements relating to reinsurance arrangements for insurance companies transacting in Tanzania. The Circular took effect from 1st January 2018. The main objective of the Circular is to enhance enforcement of section 31(2) as well as Part VII of the Insurance Act, 2009 (Insurance Act) which give the Commissioner for Insurance mandate to control reinsurance arrangements. TIRA issued the Circular after observing some insurance companies breach certain reinsurance arrangements in Tanzania. TIRA chose to address key challenges in reinsurance dealings, which include:
Due to the lessons learnt when implementing the Circular in the year 2018, TIRA revised the Circular and on 31st December 2018 issued a new Circular No.055/2017 (Revised Version 01): Conditions for Dealing with Foreign Reinsurers and Reinsurance Brokers (the Revised Circular). The Revised Circular has largely retained the provisions of the Circular but has also incorporated amendments to the Circular.
Provisions Retained in the Revised Circular
The following are some key requirements of the Circular that have been retained and reiterated due to their importance in the Revised Circular -
New Provisions in the Revised Circular
The table below highlights some notable changes brought by the Revised Circular:
|Clause||Previous requirement in the Circular||Current requirement in the Revised Circular|
|Minimum levy payable to TIRA on foreign facultative placements||
3% of applicable gross premium or USD 200 whichever is greater; plus 20% of the applicable fronting fee or reinsurance commission in excess of 12%.
1.5% of applicable gross premium or USD 200 whichever is greater; plus 1.5% premium levy prescribed in the Insurance Regulations.
Non-response to an invitation to participate in insurance of risks constitutes a serious offence
|Insurers invited by another insurer must respond to the invitation within 5 working days. Non responses shall attract sanctions by the Commissioner under the Insurance Act||
Insurers invited by another insurer must respond to the invitation within 2 working days. Non responses shall attract sanctions by the Commissioner under the Insurance Act.The Insurance Act provides for a general penalty of up to TZS 5 million.
|Submission of quarterly treaty accounts by Tanzanian registered insurance companies||Not provided.||
All insurers are now required to submit Quarterly Treaty Reinsurance Statements to TIRA.Requests for remittance of treaty reinsurance premium shall not be considered in absence of appropriate reinsurance statements.
Clyde and Co LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. Further advice should be taken before relying on the contents of this summary. Clyde & Co Tanzania accepts no responsibility for loss accessioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde and Co Tanzania.