Lesotho Insurance Industry Regulations – Governance, Risk and Compliance

Lesotho

1. Legislation Overview

1.1 Supervision and Control

– Who is the regulator?

– Which other bodies oversee the industry?

1.2 Legislation

– What are the key pieces of legislation governing the industry?

2. Compulsory Insurance

– Is motor third-party liability insurance compulsory?

– Is aviation liability insurance compulsory?

– Is marine liability insurance compulsory?

– Is professional indemnity insurance compulsory?

– Is social security insurance compulsory?

– Is employers’ liability insurance compulsory?

– Is private healthcare insurance compulsory?

– Is business interruption insurance compulsory?

– Is engineering insurance compulsory?

– Is group life insurance compulsory?

– Is individual life insurance compulsory?

– Is liability insurance compulsory?

– Is personal accident insurance compulsory?

– Is property insurance compulsory?

– Is transit insurance compulsory?

– Is clinical trials liability insurance compulsory?

– Is operational energy insurance compulsory?

– Is oil rig energy insurance compulsory?

3. Non-Admitted Insurance Regulations

– Is non-admitted primary insurance permitted?

– Is non-admitted reinsurance permitted?

– What exceptions exist for insurance and reinsurance?

– Can insurance buyers place business with a non-admitted insurer?

– Can intermediaries place business on a non-admitted basis?

– Is a local broker required to be involved when placing a policy in your jurisdiction on a cross-border basis?

– Is fronting permitted in your jurisdiction?

– Are global policies permitted in your jurisdiction?

– Is the use of DIC/DIL for the issue of global policies permitted in your jurisdiction?

– What are the fines for unauthorized non-admitted business?

– What is the term of imprisonment for unauthorized non-admitted business?

4. Company Registration and Operation

4.1 License

– Is a license required?

– What are different forms of corporate organization in which an insurance company can establish and operate?

– What are the different types of licenses issued by the regulatory authority to carry out insurance activities?

– What are the requirements and procedures to establish an insurance entity?

4.2 Foreign Direct Investment / Ownership

– What is the limit on foreign direct investment?

– Are independent operations permitted?

– Do the EEA’s Freedom of Services rights apply to this country?

4.3 Minimum Capital Requirements

– What are the minimum capital requirements?

4.4 Solvency Margins

– What is the current solvency standard?

– What are the applicable solvency margin requirements?

– What happens in the case of insolvency?

4.5 Reserve Requirements

– What are the reserve requirements?

– What is the time period (in months) for which the premium reserves to be withheld?

– What are the statutory investment compliance regulations?

4.6 Statutory Return Requirements

– What are the statutory return requirements?

4.7 Fee Structure

– What other levies are imposed on company registration and/or operation?

– What is the licensing fee?

5. Taxation

5.1 Tax on Insurance Premium

– What rates of direct and indirect taxation are imposed on admitted insurance products?

– What taxes and charges do insurers have to pay?

– What taxes and charges do policyholders have to pay?

– What rates of direct and indirect taxation are imposed on non-admitted insurance products?

5.2 Corporate Income Tax

– What is the corporate income tax rate?

5.3 Corporate Capital Gains Tax

– What is the corporate capital gains tax rate?

5.4 Value Added Tax

– What is the value-added tax rate?

6. Legal System

– What are the applicable penalties on individuals and entities contravening provisions of insurance legislation?

– How is the country’s court system structured?

– What alternative dispute resolution mechanisms exist?

7. Policy Practice

– In what language must policies be written?

– In what currency must policies be issued?

– In what currency must premiums be billed?

– Is the issuance of multiple Invoices permitted?

– Is policy wording regulated?

– Is manuscript policy wording permitted?

– Is policies with multiple named insured permitted in the market?

– What are the standard terms and conditions requirements for insurance policies?

– Is central premium collection permissible in the jurisdiction?

– What are the rules governing premium payment terms?

– Is Cash Before Cover mandatory?

– Is policy backdating permitted?

– What is the applicable client penalties for late premium payments?

– What is the applicable penalty on the insurer for late premium payments by the insured?

– Are KYC documents required?

– Is Tax Identity Number (for individuals) or the VAT number (for companies) a mandatory requirement on the insurance policy?

– Is credit report of the insured a legal requirement for concluding an insurance policy?

– Is collecting an anti-money laundering form a legal requirement?

– Is local insured’s ownership certificate a mandatory requirement in the market?

– Does tacit renewal apply?

– What is the notice period for an insurer to cancel a policy?

– What are the rules governing claims payment terms?

– Which perils do policies cover?

– What cover limits apply?

– What are the sublimits of liability?

– Does the law permit the use of aggregate tie-of limits endorsement in the market?

– What are the policy deductible limits?

– Is rating tariff regulated?

– What is the statutory rating tariff?

– Who regulates intermediary commission rates?

– What are the rates of intermediary remuneration?

– Is local broker commission permitted?

– What are the applicable local broker commission rates?

– Is commission to unlicensed broker permitted?

– Is producing office broker commission permitted?

– Are there any compulsory pools?

– Are there any non-compulsory state-run pools?

– Are there any non-compulsory market-run pools?

– Are there compulsory reinsurance cessions?

– What is the compulsory cession rate?

– What is the compulsory local retention rate?

– What percent of exportable premium to be retained locally?

– What is the rate of fire brigade charges?

– Do policies include terrorism provisions?

– Are there any provisions for inflation adjustments in property insurance policies?

– Is there a penalty if the sum insured is less than the full value in property insurance policies?

– What is the basis of claims for business interruption insurance (loss of profit/loss of earnings)?

– At what rate is a claims inflation escalator provided for business interruption insurance?

– Is contingent business interruption cover available?

– Is machinery breakdown written separately or covered in engineering policies?

– Does breakdown cover in an engineering policy extend to physical damage to machinery?

– Is computer breakdown written separately or covered in engineering policies?

– Is business interruption coverage following breakdown available in engineering policies?

– Is construction property coverage included in engineering policies?

– Is uninsured driver facility coverage included in motor insurance policies?

– What is the rate of no-claims discount offered for motor insurance policies?

– Is clinical trials liability insurance sold as a stand-alone policy or as part of a general liability/medical malpractice cover?

– What are the standard policy inclusions and exclusions under clinical trials liability insurance policy?

– Is medical malpractice a standard extension under clinical trials liability policy?

– Is an insurance certificate a mandatory requirement to conduct clinical trials?

– Who is legally permitted to issue certificates of insurance for clinical trials liability policy?

– Is clinical trials liability coverage offered on a no-fault basis?

– Is multi-year clinical trials liability insurance policy permitted?

– What is the standard/extended reporting period for clinical trials liability claims?

– Is there any (re)insurance pool to cover clinical trials liability risks?

– Can a foreign entity be listed as a named insured on a local clinical trials liability insurance policy?

– What are the standard policy inclusions and exclusions under operational energy insurance?

– What are the standard policy inclusions and exclusions under oil rig energy insurance?

Lesotho – Corporate Tax Rates for the Financial Year 2024