Insurance laws East Timor
The insurance sector in Timor-Leste (East Timor) is regulated by the Banco Central de Timor-Leste (BCTL), which serves as the central bank and the financial services regulator. The primary legal framework is the Law N.° 6/2005, which establishes the regime for the licensing, oversight, and regulation of insurance companies and intermediaries.
Here are some key aspects of East Timor's insurance laws:
1. Regulatory Body and Framework:
Central Bank of Timor-Leste (BCTL): The BCTL is responsible for licensing, supervising, and regulating all financial institutions, including insurance companies and intermediaries.
Law No. 6/2005: This law, titled "Regime for the Licensing, Oversight and Regulation of Insurance Companies and Insurance Intermediaries," sets the rules for operating in the insurance market. It outlines the responsibilities of the BCTL, including the power to approve public instructions to regulate the activities of insurance entities.
No "Composite" Insurance: The law prohibits a single company from offering both long-term (life) and short-term (non-life) insurance, meaning these must be handled by separate entities.
2. Licensing and Operations:
Any person or entity wanting to provide insurance policies must first obtain a license from the BCTL.
Insurance intermediaries (brokers and agents) also require authorization from the BCTL to operate.
Foreign reinsurance companies, however, are permitted to operate without a license.
The BCTL has also issued instructions regarding external audits for insurance companies and intermediaries, setting out rules for auditors, their appointments, and the publication of reports.
3. Compulsory Insurance:
Motor Vehicle Third-Party Liability Insurance: This is a key piece of mandatory insurance in Timor-Leste. Public Instruction No. 07/2010 of the Banking and Payments Authority (a predecessor to the BCTL) established that all motor vehicles must have this insurance. The law also sets out specific conditions, such as the maximum value of compensation and penalties for non-compliance.
Professional Indemnity Insurance: This is also a compulsory requirement for certain professionals in the country.
Social Security Insurance: This is another form of compulsory insurance.
4. Policyholder Protection:
The BCTL's responsibilities include protecting consumers and policyholders. The law gives the BCTL the power to examine the accounts and records of insurance companies to ensure they are operating in the best interests of their customers.
In the case of motor vehicle third-party liability, the law includes provisions to ensure timely claim settlements, with penalties for insurers who fail to settle valid claims within a specified period.
In summary, Timor-Leste has a developing but structured legal framework for its insurance sector, centered on the BCTL's regulatory oversight and the foundational Law No. 6/2005. The system includes strict licensing requirements, a ban on composite insurance, and several compulsory insurance classes, all designed to ensure financial stability and protect consumers.
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