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Zambia: New insurance law takes effect

6 February 2023
– 4 Minute Read


On 23 December 2022, the long-awaited Insurance Act, 2021 (new Act) came into force following the issuance of Commencement Order No. 83 of 2022 by the Minister of Finance and National Planning, Dr Situmbeko Musokotwane.

The new Act, which was enacted in May 2021, provides a new and comprehensive legal framework, significantly overhauling and repealing the Insurance Act of 1997. The new Act has also been followed by subsidiary legislation, the Insurance (General) Regulations, 2022 (Regulations).

The new Act and Regulations (new Legislation) are of material significance to all insurers, reinsurers, brokers, agents, and auxiliary service providers. The new Legislation also impacts offshore non-life insurers and offshore reinsurers, as well as offshore insurers and reinsurers, brokers and insurance groups with interests in Zambia.

Further to our previous updates: In conversation with our regulators; and Zambia: 2023 national budget — government seeks to increase uptake of insurance services, we set out below a reminder of the key changes and provisions introduced under the new Legislation.

Shareholding and local ownership

The new Legislation introduces significant changes to the shareholding of insurers, reinsurers and brokers in Zambia. Insurers and reinsurers are now required to have no less than 30% of their subscribed share capital owned by Zambian citizens or citizen-owned companies. Brokers are required to have no less than 51% of their subscribed shareholding owned by citizens or a citizen-owned company. This is aimed at increasing citizen participation (and ultimately economic benefit) in the insurance industry.

Existing insurers and reinsurers have a four-year grace period to comply with the abovementioned shareholding provisions. 

Solvency and capital adequacy

The new Legislation proposes to revise the solvency requirements applicable to insurers and reinsurers (licensees) by prescribing minimum capital adequacy requirements in respect of risks inherent to assets, liabilities, classes and volume of insurance business.

In particular, the new Legislation requires licensees to have a solvency margin of at least 10% and maintain a capital adequacy requirement ratio of at least 150%, which are to be computed in accordance with the Regulations.

A licensee is also obliged to provide an auditor-certified solvency statement within 90 days of the end of each fiscal year as confirmation of compliance with the solvency requirements.

If a licensee anticipates slipping below the margins, it has the option to alert the regulatory and supervisory body for pensions and insurance industries in Zambia, the Pensions and Insurance Authority (PIA), and submit an undertaking outlining how it intends to resolve and restore its margins.

The new Legislation provides a three-year grace period for licensees to comply with the solvency margin and capital adequacy requirements.


Licensees are now required to have a minimum of five directors, of whom at least one must be an independent director who must be a person with no interest in the business of the insurer that could reasonably be perceived as being capable of materially affecting the director’s judgement in serving the best interests of the company. Brokers, on the other hand, are required to have at least three directors, of whom one must be independent.

The new Legislation introduces minimum corporate governance standards for all players in the insurance industry, these are yet to be issued by the PIA.

Dispute resolution

The new Legislation also introduces an Insurance Tribunal (Tribunal) as an appeals body that will address grievances in the insurance industry. This is a significant and commendable step towards improving the effective resolution of grievances and disputes in the insurance industry. Once constituted, the Tribunal is expected to improve the administrative resolution of disputes before parties resort to courts of law.

Way forward

The issued Regulations do not apply to microinsurance businesses. Therefore, we anticipate the PIA will issue regulations for microinsurance businesses.

In the meantime, licensees should familiarise themselves with the new obligations imposed on them and put measures in place to ensure compliance within the various timelines. Furthermore, new players interested in entering the Zambian insurance industry need to consider how best to structure their businesses to ensure compliance with the new Legislation.