INSURANCE ACT, 1994

PART IV
RETURNS, INSPECTIONS AND INVESTIGATIONS,
WINDING UP AND TRANSFERS OF BUSINESS

36.(1) A registered insurer shall prepare such statements of account and other account and statements and in such form and manner as may be prescribed and lodge audit them with the Authority.

(2) A registered insurer shall cause to be kept such books and records as will sufficiently explain the transactions and financial position of the insurer and enables the insurer to comply with the requirements of this section and section 37, and shall cause those books and records to be kept in such manner as to enable them to be conveniently and properly audited.

(3) A registered insurer shall have its accounts audited for each accounting period for which statements of account are prepared in accordance with regulations prescribed under subsection (1).

(4) No person shall act as auditor for any registered insurer unless-

(a) he has a place of business in Seychelles;

(b) he is approved under the Companies Act as a company auditor for the purposes of that Act;

(c) he has the approval of the Authority; and

(d) he holds a licence to provide services as an auditor under the Licences Act, 1986.

(5) An auditor shall not be approved by the Authority as an auditor for registered insurers unless he is able to comply with such conditions in relation to the discharge of his duties as may be determined by the Authority.

(6) The Authority may impose all or any of the following duties on an auditor-

(a) a duty to submit such additional information in relation to his audit as the Authority considers necessary;

(b) a duty to enlarge or extend the scope of his audit of the business and affairs of the insurer;

(c) a duty to carry out any other examination or establish any procedure in any particular case; and

(d) a duty to submit a report on any of the matters referred to in paragraphs (b) and (c), and the insurer shall remunerate the auditor in respect of the discharge by him of all or any of these duties.

(7) An auditor's report made under subsection (6) shall be lodged with the Authority together with the statements of accounts lodged by the insurer under subsection (1).

(8) If an auditor, in the course of the performance of his duties as an auditor of an insurer, is satisfied that-

(a) there has been a serious breach or contravention of the provisions of this Act or that a criminal offence involving fraud or dishonesty has been committed;

(b) any transaction or dispute has taken place which will have a material effect on the solvency of any insurance fund established by the insurer under this Act;

(c) serious irregularities have occurred, including irregularities that jeopardise the interests of policy owners; or

(d) the insurer is unable to meet its obligations, he shall immediately report the matter to the Authority.

(9) The documents to be lodged with the Authority under this section for any accounting period of an insurer shall be accompanied by copies of any report submitted to the members of the insurer with respect to that period and (if it is not among the documents so lodged) by any statement of accounts so submitted with respect to that period; but references in this Act to documents lodged with the Authority shall not be taken to include documents required by this subsection to accompany documents so lodged.

(10) Where any report or statement referred to in subsection (9) is in a language other than English, the copy required by that subsection shall be in English and shall be certified to be a true translation of the original by the translator.

37.(1) Subject to this section, an insurer registered under this Act in respect of life business shall once in a period of 12 months have an investigation made by a qualified actuary into the financial condition of the life business and shall lodge with the Authority such abstract of the actuary's report and certificate relating thereto and such statements as to that business as are prescribed under section 36(1).

(2) An investigation under subsection (1) shall be made as at the end of each accounting period.

(3) Where an insurer registered under this Act in respect of life business-

(a) has an actuarial investigation made into the life business for which it maintains an insurance fund under this Act (whether with or without any other life business carried on by it); and

(b) the investigation is not made to comply with subsection(1) but the results of the investigation are made public,

the insurer shall, as to the lodging of documents with the Authority, comply with the requirements of subsection (1) as in the case of an investigation made under that subsection.

38.(1) If it appears to the Authority that any document lodged in accordance require with section 36 or 37 is in any particular unsatisfactory, incomplete, inaccurate or misleading or that it does not comply with the requirements of this Act, the Authority may by notice in writing require such explanations as or it considers necessary to be made by or on behalf of the insurer within time (not being less than 14 days) as is specified in the notice.

(2) The Authority may, after considering the explanations referred to in subsection (1), or if such explanations have not been given by or on behalf of the insurer within the time specified in that subsection, reject the document or give such directions as it thinks necessary for its variation within such time (not being less than one month) as is specified in the directions.

(3) Directions given under subsection (2) with respect to any document may require such consequential variations of any other document lodged by the insurer under section 36 or 37 as may be specified in the directions.

(4) Where directions are given under subsection (2), any document to which they relates shall be deemed not to have been lodged until it is re-submitted with the variations required by the directions, but the insurer shall be deemed to have submitted the document within the time limited by regulations prescribed under section 36(1) if it is re-submitted with the required variations within the time limited by the directions.

39.(1) Any member or policy owner of an insurer shall have a right, on provisions applying to the insurer, to be sent by the insurer at an address supplied by him copies of documents lodged by the insurer to comply with section 36 or 37, and to have the copies despatched not later than 14 days after the insurer receives the application:

Provided that the right shall not extend to any document excepted from this provision by regulations prescribed under section 36(1), or to a document of any other description except the last lodged of that description.

(2) Any person shall have the right, on payment of the prescribed fee, at any time during working hours of the office of the Authority, to inspect at that office any document lodged by an insurer to comply with section 36 or 37 and any document required by sections 36(9) to accompany the document so lodged and make a copy of the whole or any part of it:

Provided that the right shall not extend to any document excepted from this provisions by regulations prescribed under section 36(1), or to documents of any other description lodged more than 10 years previously.

(3) In any proceedings a certificate signed by any person appointed by the Authority under section 49 that a document is one lodged by an insurer to comply with section 36 or 37, or one that accompanied documents so lodged, shall be admissible as evidence of the facts certified.

(4) Where a registered insurer fails to comply with section 36 or 37, the insurer is guilty of an offence and is liable on conviction to a fine of R30,000 and if the offence is continued after conviction to a further fine of R3,000 for each day during which the offence is so continued.

40.(1) The Authority may from time to time inspect the books, accounts and transactions of a registered insurer and institute an investigation into the whole or any part of the insurance business carried on under this Act by the of insurer

(2) The costs and expenses of any investigation under subsection (1) shall be paid by the insurer.

(3) In making an inspection or investigation under this section, the Authority may, by notice in writing, require

(a) the insurer, or any person having the custody thereof on behalf of the insurer;

(b) any person who is or has any time been or acted as a director, actuary, auditor, officer, servant or agent of the insurer; or

(c) any past or present member or policy owner of the insurer,

to produce for its inspection, and allow it to copy the whole or any part of any books, accounts, records or other documents of the insurer, whether kept in Seychelles or elsewhere (including documents evidencing the insurer's title to any assets):

Provided that a requirement under this subsection shall extend only to documents relating to business carried on by the insurer under this Act or evidencing the insurer's title to assets held for the purposes of any such business.

(4) In making an investigation under this section, the Authority may require any such individual as is specified in subsection (3) to attend before it and be examined on oath with respect to the insurer's business, and for the purposes of this subsection may administer oaths.

(5) Any person who refuses or fails when required to do so under subsection (3) or (4) to produce any document in his custody or to attend for or submit to examination by the Authority or any person appointed by it, or to answer any question put to him on such examination is guilty of an offence and is liable on conviction to a fine of R30,000 and if the offence is continued after conviction to a further fine of R3,000 for each day during which the offence is so continued.

41.(1) Where the Authority is satisfied that the affairs of any registered insurer are being conducted in a manner likely to be detrimental to the public to issue interest or the interests of the policy owners or prejudicial to the interests of direction the insurer, the Authority may issue such directions to the insurer as it considers necessary and in particular may require the insurer-

(a) to take such action or recruit such management personnel as may be necessary to enable it to conduct its business in accordance with sound insurance principles;

(b) to take action to suspend or remove any of its directors or any person whom the Authority considers unfit to be associated with it;

(c) to take action as to the disposition or recovery of its assets;

(d) to take any available steps for the recovery by the insurer of sums appearing to the Authority to have been illegally or improperly paid;

(e) to stop renewing or issuing further policies of the class of business to which the direction relates;

(f) to make such arrangements with respect of the class to reinsurance as the Authority so specifies; or

(g) to take action to make good any default under section 15, 16, 17, 18 or 19.

(2) The Authority may, upon representation being made to it, or on its own motion, modify or cancel any direction issued under subsection (1) and, is so doing, may impose such conditions as it thinks fit.

(3) Any insurer who fails to comply with any direction made under subsection (1) is guilty of an offence and is liable on conviction to a fine of R60,000 and to imprisonment for a term of 6 months, and if the offence is continued after conviction to a further fine of R3,000 for each day during which the offence is so continued.

42.(1) The persons who may petition under the Companies Act for the provisions winding up of the affairs of a registered insurer, being a company, or for the as to continuance of the winding up of the affairs of such an insurer subject to the winding up supervision of the court, shall include the Authority.

(2) The Authority may, in accordance with the provisions of the Companies Act, present a petition for the winding up of a registered insurer, being a company, if the insurer has contravened or failed to comply with any provision of this Act.

(3) The Authority shall be a party to any proceedings under the Companies Act relating to the winding up of the affairs of such an insurer, and the liquidator in such a winding up shall give it such information as he may from time to time require about the affairs of the insurer.

(4) For the purposes of any proceedings under the Companies Act for the winding up of the affairs of such an insurer by the court, the contingent and prospective liabilities of the insurer in respect of policies shall, in determining whether it is unable to pay its debts, be estimated in accordance with such rules as may be prescribed; and evidence that the insurer was insolvent at the close of the last accounting period for which statements of account have been lodged with the Authority under section 36 shall be evidence that the insurer continues to be unable to pay its debts.

(5) Notwithstanding the Companies Act, in the winding up of the affairs of an insurer registered under this Act, the valuation of liabilities in respect of policies shall, whether the insurer is insolvent or not, be estimated in accordance with any prescribed rules and, as regards matters not fixed by the rules, on a basis approved by the court;

Provided that in members' voluntary winding up the basis to be adopted as regards matters not fixed by the rules may be approved by the Authority instead of by the court.

(6) References in this section to an insurer registered under this Act shall be extended also to an insurer who has ceased to be so registered but remains under liability in respect of Seychelles policies or offshore policies.

43.(1) Where the Authority gives a registered insurer, being a company, a provision under section 41 (1) (e) by reason of the insolvency of the fund maintained by the insurer under this Act for either class of insurance directed business, the affairs of the insurer may be wound up by the court under the to cease Companies Act as if it had suspended its business for a whole year.

(2) Where the Authority gives a registered insurer, being a company, a direction under section 41(1) (e) but, on a petition for the affairs of the insurer to be wound up by the court, the court is satisfied that the insurer will be able to pay its debts in full within 12 months or such longer period as the court thinks reasonable, the court may (if it thinks fit) order the affairs of the insurer to be wound up only as regards the insurance fund maintained for the class of business to which the direction relates.

(3) An order made under subsection (2) for a limited winding up shall be of the same effect as an order for the affairs of the insurer to be wound up generally, except in so far as this section otherwise provides.

(4) Where an order under subsection (2) is made, the powers of the liquidator shall be exercisable only for the purpose of applying the assets of the relevant insurance fund in discharging the liabilities to which they are applicable, together with the costs, charges and expenses incurred in the winding up: but the insurer shall from time to time, as the court may direct, make such additions to those assets as are required to secure that they are sufficient for the purpose or shall, if the court so directs, discharge any of those liabilities out of those assets.

(5) In the winding up of the affairs of an insurer under such an order, the Companies Act shall have effect subject to the following modifications:

(a) the provisions of that Act relating to liabilities of past or present members of a company as contributories shall not apply;

(b) where, at any time after the presentation of a winding petition and whether before or after a winding up order has been made, an action or proceeding against the insurer is pending, the insurer or a creditor or contributory of the insurer may apply to the court to stay or restrain further action or proceedings in the action or proceeding and the court may stay or restrain the action or proceeding on such terms as it thinks fit;

(c) notwithstanding that a winding up order has been made or a provisional liquidator appointed in respect of the insurer, an action or proceeding may be proceeded with against the insurer without leave of the court;

(d) a disposition of the property of the insurer and any transfer of shares or alteration in the status of the members of the insurer after the commencement of the winding up of the insurer by the court shall be valid;

(e) an attachment, sequestration, distress or execution put in force against the assets of the insurer after the commencement of the winding up of the insurer by the court shall be valid;

(f) an insurer shall not be required to have the words "in liquidation"after its name on any invoice, order for goods or business issued by or on its behalf;

(g) any transfer, mortgage, charge, delivery of goods, payment, execution or other act relating to property made by or against the insurer shall not be void or voidable in the event of the insurer being wound up notwithstanding that had it been made or done by or against an individual, would in the bankruptcy of the individual under the law of bankruptcy be void or voidable;

(h) the provision of that Act that a floating charge on the undertaking or property of an insurer created within six months of the commencement of the winding up shall be valid unless it is proved that the insurer immediately after the creation of the charge was solvent shall not apply;

(i) the provision of that Act that shall allows the liquidator of a company to disclaim onerous property shall not apply;

(j) the provision of that Act relating to the duties of a bailiff, after a notice is served on the bailiff that a provisional liquidator has been appointed or a winding up order made or a resolution for voluntary winding up has been passed, as to the goods of a company taken in execution shall not apply.

(6) Where an order under subsection (2) is made, the court may at any time, on the application of the liquidator or of any person who might petition for the affairs of the insurer to be wound up, substitute an order for the affairs of the insurer to be wound up generally, and give such directions as the court thinks fit as to matters in progress under the previous order; and, subject to any such directions, the winding up shall for all purposes connected with the substituted order be deemed to have commenced at the time of the application for that order.

44. Where a registered insurer becomes insolvent or is unable to meet its obligations, the assets of the insurer shall be available to meet the liabilities of the insurer to all policy owners of Seychelles policies and offshore policies and these liabilities shall have priority over all unsecured liabilities of the insurer other than in the case of a company preferential payments or debts specified under th Companies Act.

45.(1) The Authority shall establish and maintain in accordance with this Protection section and regulations made under this Act, a Policy Owners' Protection (referred to in this section and in section 66 as the "Fund") for the purposes of-

(a) indemnifying and compensating in whole or in part or otherwise assisting or protecting policy owners and others who have been or may be prejudiced in consequence of the inability of registered insurers to meet their liabilities under life policies and compulsory insurance policies issued by them;

(b) subject to subsection (13), to compensate persons in respect of damage arising out of the use of a motor vehicle on a road, whether or not such use is required to be covered by a policy of insurance in respect of third party risks under the Motor Vehicles Insurance (Third Party Risks) Act.

(c) subject to subsection (14), compensating persons in respect of damage caused by a natural disaster.

(2) Subject to such exceptions or restrictions as may be prescribed, the Authority shall-

(a) secure that a sum equal to-

(i) the full amount of any liability of a registered insurer in liquidation or in financial difficulties in respect of a sum payable to any person entitled to the benefit under the terms of any compulsory insurance policy, being a liability arising in respect of a liability of the policy owner which is a liability subject to compulsory insurance; and

(ii) 90% of the amount of any liability of a registered insurer in liquidation or in financial difficulties towards a policy owner under the terms of any life policy which was a Seychelles policy or an offshore policy and not being a contract of reinsurance,

is paid to the person or policy owner as soon as reasonably practicable after the beginning of the liquidation; and

(b) make arrangements so far as reasonably practicable for securing continuity of insurance for every policy owner of a registered insurer in liquidation or in financial difficulties who is a policy owner in respect of a life policy which was a Seychelles policy or an offshore policy and not being a contract of reinsurance, and for this purpose the Authority may take measures to secure or facilitate the transfer of the life business of the insurer, or part of that business, to another registered insurer or to secure the issue by another registered insurer to the policy owners of life policies in substitution of their existing policies.

(c) secure that a sum equal to such amount of compensation payable to a person eligible under subsection (1)(b) or subsection (1) (c) as determined by the Authority is paid to the person as soon as reasonably practicable after the determination.

(3) For the purposes of financing the expenditure of the Fund the regulations may from time to time impose a levy on registered insurers carrying on-

(a) general business under this Act (referred to in this section as a general business levy); and

(b) life business under this Act (referred to in this section as a life business levy).

(4) The Proceeds of general business levies and life business levies shall be paid into the Fund.

(5) The amounts required to be paid by any registered insurer under general business levies or life business levies imposed under subsection (3) in any financial year shall not exceed one per cent of any income of the insurer for the year ending last before the beginning of that financial year which income is liable to the general business levy or the life business levy, as the case may be.

(6) The amount each registered insurer may be required to pay under general business levies imposed in any financial year shall be calculated by reference to the gross premium income of Seychelles policies of the insurer for the year ending last before the beginning of that financial year in respect of general business carried under this Act other that reinsurance business; and any such income is hereinafter in this section referred to, in relation to any registered insurer, as income of the insurer for the year in question which is income liable to the general business levy.

(7) The amount each registered insurer may be required to pay under life business levies imposed in any financial year shall be calculated by reference to the gross premium income of the insurer for the year ending last before the beginning of that financial year in respect of life business carried on under this Act other than reinsurance business; and any such income is hereafter in this section referred to, in relation to any registered insurer, as income of the insurer for the year in question which is income liable to the life business levy.

(8) In subsections (6) and (7), the gross premium income of a registered insurer for any year in respect of any class of insurance business carried on under this Act other than reinsurance business means the gross amounts after deducting any return of premiums recorded in the accounts of the insurer during that year as paid or due to the insurer by way of premiums under that class.

(9) Subject to subsection (10) the proceeds of general business levies may be applied only on expenditure incurred by the Authority under subsection (2) (a)(i) and (2)(c), and the proceeds of life business levies may be applied only on expenditure incurred by the Authority under subsection (2)(a)(ii) and (2)(b).

(10) The Authority may deduct any expenditure incurred by it in performing its functions under this section from the Fund.

(11) Without prejudice to the generality of section 63, regulations made under this Act may provide-

(a) for the imposition, distribution and enforcement of general business levies and life business levies and other matters in connection with or in relation to those levies; and

(b) for the investment of such part of the Fund as appears to the Authority to be surplus to its requirements for the time being.

(12) For the purposes of this section-

(a) "compulsory insurance policy" means any policy or security which satisfies the requirements of the Motor Vehicles Insurance (Third Party Risks) Act;

(b) references to a registered insurer in liquidation are references to an insurer in whose case-

(i) a resolution has been passed after the commencement of this Act in accordance with the provisions of the Companies Act for the voluntary winding up of the insurer, otherwise than merely for the purpose of reconstruction of the insurer or of amalgamation with another insurer;

(ii) without any such resolution having being passed beforehand, an order has been made after that date for the winding up of the insurer by the Court under the Companies Act on a petition presented after that date; or

(c) references, in relation to a registered insurer in liquidation, to the beginning of the liquidation, are references to the passing of any such resolution or the making of any such order referred to in paragraph (a), as the case may be; and

(d) a registered insurer, not being an insurer in liquidation, is an insurer in financial difficulties if-

(i) in the case of a company-

A. a provisional liquidator has been appointed in respect of the insurer under the Companies Act;

B. it has been proved, in any proceedings on a petition for the winding up of the insurer under the Companies Act, to be unable to pay its debts; or

C. an application has been made to the Court under the Companies Act for the sanction of a compromise or arrangement proposed between the insurer and its creditors or any class of them (whether or not any of its members are also parties thereto) and the terms of the compromise or arrangement provide for reducing the liabilities or the benefits provided for under the insurer's life policies;

(e) "natural disaster" includes drought, excessive rainfall, storm or any other event occurring without the intervention of mankind.

(ii) in the case of a corporate body, the corporate body is in the opinion of the Authority unable to pay its debts.

(13) No compensation shall be paid under subsection (1)(b) in relation to a motor vehicle the use of which is covered by a policy of insurance in respect of third party risks under the Motor Vehicle Insurance (Third Party Risks) Act, where the owner or driver of the motor vehicle at the time of such use-

(a) has been identified;

(b) is resident in Seychelles;

(c) would, on the balance of probability, be liable in damages in proceedings instituted against the owner or driver in a court in respect of the damages arising out of such use; and

(d) would be covered in respect of the liability by the policy of insurance.

(14) No compensation shall be paid out of the fund under subsection (1)(c) in respect of damage caused by a natural disaster where the liability to pay the damage is covered by a policy of insurance.

(15) Where the Authority pays any money out of the Fund to any person eligible for payment out of the Fund, the Authority shall be subrogated to the extent of such payment to the rights and remedies of that person in relation to the matter for which the payment was made.

46.(1) The whole or part of the insurance business of a registered insurer may be transferred to another insurer registered in respect of the class or classes of business to be transferred, if the transfer is effected by a scheme under this section, but shall not be transferred except such a scheme.

(2) Any registered insurer shall by virtue of this section have power to make such a transfer by a scheme under this section, and the directors shall have authority on behalf of the insurer to arrange for and do all things necessary to give effect to such a transfer; and this subsection shall apply notwithstanding the absence of that power or authority under the constitution of the insurer or any limitation imposed by its constitution on its powers on the authority of its directors.

(3) A scheme under this section may provide for the business in question to be transferred to a body not registered as an insurer under this Act in respect of the relevant class of business (including a body not yet in existence), if the scheme is so framed as to operate only in the event of the body becoming so registered.

(4) A scheme under this section for the transfer of any insurance business may extend to the transfer with it of any other business, not being insurance business, where the other business is carried on by the insurer as ancillary only to the insurance business transferred.

(5) A scheme under this section may include provision for matters incidental to the transfer thereby effected, and provision for giving effect to that transfer, and in particular-

(a) for any property, rights or liabilities of the transferor (including assets comprised in an insurance fund) to vest, by virtue of the scheme and without further or other assurance, in the transferee; and

(b) for the registration by the transferee of policies transferred, for the amounts to be included in respect of those policies in the transferee's insurance fund and for other matters arising under this Act out of the transfer.

(6) A scheme under this section shall be of no effect unless confirmed by the Court, but may be prepared and submitted for confirmation to the Court by any of the insurers concerned; and if so confirmed, the scheme shall have effect according to its tenor notwithstanding anything in the preceding sections of this Act and be binding on any person thereby affected.

47.(1) Before an application is made to the Court for confirmation of a scheme under section 46-

(a) a copy of the scheme shall be lodged with the Authority together with copies of the actuarial and other reports, if any, upon which the scheme is founded;

(b) not earlier than one month after the copy is so lodged, notice of the intention to make the application (containing such particulars as are prescribed) shall be published in the Gazette and in not less than two newspapers approved by the Authority; and

(c) for a period of 15 days after the publication of the notice a copy of the scheme shall be kept at each office of every insurer concerned in or from which the insurer carries on insurance business under this Act, and shall be open to inspection by all members and policy owners of such an insurer who are affected by the scheme.

(2) The Authority may cause a report on the scheme to be made by a qualified actuary independent of the parties to the scheme and, if it does so, shall cause a copy of the report to be sent to each of the insurers concerned.

(3) Copies of the scheme and any such report as is mentioned in subsection (1) (a) or (2), or summaries approved by the Authority of the scheme and any such report, shall, except in so far as the Court upon application made in that behalf otherwise directs, be transmitted by the insurers concerned, at least 15 days before application is made for confirmation of the scheme to every policy owner affected by the scheme.

(4) An application to the court with respect to any matter connected with the scheme may, at any time before confirmation by the court, be made by the Authority or by any person who in the opinion of the court is likely to be affected by the scheme.

(5) The court may confirm the scheme without modification or subject to modifications agreed to by the insurers concerned, or may refuse to confirm the scheme.

(6) The insurers concerned shall be jointly and severally liable to reimburse to the Authority any expenses incurred by it under this section in connection with any scheme or proposed scheme (subject to any order of the court as to cost); and a scheme shall include provision as to how that liability is, as between the insurers, to be borne.

48.(1) Where by a scheme under section 46 insurance business of an insurer be filed where is transferred to another, the transferee shall, within one month after the scheme takes effect, lodge with the Authority,

(a) statement of the assets and liabilities of each insurer concerned as at the time immediately before the transfer; signed on behalf of the insurer and, in the case of the transferor, indicating whether the transfer is of the whole of the transferor's business and, if not, the extend to which transferor's assets and liabilities relate to the business transferred;

(b) a copy of the scheme as confirmed by the court, and a certified copy of the order of the court confirming the scheme;

(c) copies of any actuarial or other reports upon which the scheme was founded (being reports made since a copy of the scheme was lodged under section 47(1);

and

(d) a statutory declaration made by the chairman of directors of the transferee, or by its principal officer in Seychelles, fully setting forth every payment made or to be made to any person on account of the transfer, and stating that, to the best of his belief, no other payment beyond those so set forth has been, or is to be made on account thereof by or with the knowledge of any insurer concerned.

(2) In paragraph (d) of subsection (1) references to the making of a payment include references to the transfer of property or rights of any description.

(3) On the confirmation of a scheme under section 46 each of the insurers concerned, if they are companies, shall file a copy of the scheme with the Registrar of Companies.