There are many opportunities in Africa because the insurance market is largely untapped. Below are some of the legal issues you need to be mindful of when doing business in the continent.
For more detail read our Introduction to insurance business in Africa: Ten things to know.
1. Jurisdiction
Africa is made up of 55 states, each with their own laws. There is a mix of civil and common law jurisdictions.
2. Regulations
The extent of regulation varies across the continent. Various regions are working towards harmonising some laws. For example, the Francophone countries have come together to harmonise commercial laws. Common insurance regulations in the East African community is also being considered.
3. Ownership and indiginisation
While foreign investment is welcome there are local law conditions that may require specified percentage ownership or employment for citizens of various African states. Local shareholding in foreign owned entities may be required.
4. Foreign insurance and reinsurance restrictions
It is easier to place reinsurance rather than direct insurance offshore but in some cases even a percentage of the reinsurance has to be placed locally. Solvency and capital requirements for each jurisdiction may differ.
5. Local partners
It is advisable to partner with local insurers in order to facilitate business and to comply with local ownership requirements. Making use of trusted local counsel is also wise.
6. Exchange control
Approvals may be needed for receiving premiums or paying claims cross-border. There are also tax implications. Some regions are working to facilitate cross-border trade, for instance the common monetary area which includes Lesotho, South Africa and Swaziland.
7. Policyholder and consumer protection
Consumer protection is on the rise in Africa. You are likely to find consumer protection in various pieces of legislation, but overarching codified rules are being developed in some states. South Africa is a frontrunner in this regard, with the Consumer Protection Act and Treating Customers Fairly principles for the insurance industry.
8. Data protection
Data protection and protection of personal information is developing to be in line with international data protection standards. Angolan and South African law is particularly strong in this regard.
9. Choice of law and dispute resolution
Choice of law clauses and arbitration clauses in insurance contracts are important. Parties have more control over independent arbitration. There are a number of good jurisdictions for arbitration, including the Arbitration Foundation of Southern Africa and arbitration foundations in Mauritius, Cairo and Cote d’Ivoire.
Some African states have conceded to the New York Convention which provides for the recognition and enforcement of foreign arbitral awards.
10. Competition laws
Apart from various countries having their own competition laws, the common market for Eastern and Southern Africa (COMESA) regulates competition across its area of operation.
