Insurance laws Burkina Faso
The insurance sector in Burkina Faso is primarily governed by a regional body, the Inter-African Conference of Insurance Markets (CIMA). CIMA is an integrated organization that harmonizes insurance law for its 14 member states, most of which are Francophone countries in sub-Saharan Africa.
Here are the key aspects of insurance laws in Burkina Faso:
1. Regulatory Framework:
CIMA Code: The foundation of insurance regulation is the CIMA Code, which provides a comprehensive legal framework for insurance and reinsurance companies. It covers licensing, capital requirements, solvency margins, and other operational rules.
National Directorate of Insurance (DNA): While CIMA provides the overarching legal framework, the DNA in Burkina Faso is the national regulator responsible for the supervision of the insurance industry. The DNA issues licenses and ensures compliance with the CIMA Code at the national level.
2. Compulsory Insurance:
Several types of insurance are mandatory in Burkina Faso, including:
Motor Third-Party Liability Insurance: This is a crucial requirement for all vehicle owners to cover damages they may cause to third parties.
Universal Health Insurance Scheme (RAMU): A law was adopted in 2015 to establish a compulsory Universal Health Insurance Scheme for all citizens.
Professional Indemnity Insurance: This is mandatory for insurance intermediaries, such as agents and brokers, to cover their professional liability.
Marine Liability Insurance: This is required for certain maritime activities.
Social Security Insurance: This covers various social risks for employees.
Engineering Insurance: This is required for construction and engineering projects.
3. Foreign and International Companies:
CIMA Zone: Insurance companies from other CIMA member states are permitted to operate in Burkina Faso without a separate license.
Non-CIMA Companies: Foreign-owned insurers can operate local branches in Burkina Faso, but they must comply with the CIMA Code and are subject to the same regulations as locally owned companies.
Foreign Direct Investment (FDI): The law permits 100% FDI in the insurance industry.
"Cash Before Cover" Rule: A notable rule in the CIMA Code is the "cash before cover" requirement (Article 13), which stipulates that a policy cannot be delivered until the premium has been paid.
4. Other Key Regulations:
Composite Insurance: The practice of composite insurance (offering both life and non-life insurance) is not permitted. Companies must specialize in either life or non-life business.
Reinsurance: There are regulations regarding reinsurance, including limits on the amount of premium that can be ceded to companies outside the CIMA zone. Additionally, a percentage of premiums must be ceded to the regional reinsurer, CICA Re.
The CIMA framework ensures a degree of harmonization and stability within the regional insurance market while also allowing national regulators like Burkina Faso's DNA to oversee the market at the country level.
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