Insurance laws Libya
Libya's insurance industry is regulated by the Insurance Department of the General People's Committee for Economy, Trade and Investment. While the market has seen some growth and private sector participation in recent years, it is still considered to be in its early stages of development and faces challenges, including the need for updated legislation and stronger regulatory oversight.
Here are some key aspects of insurance laws and regulations in Libya:
1. Regulatory Framework and Key Legislation:
The primary legislation governing the industry is Insurance Law No. 3 of 2005 on the Supervision and Control of Insurance Activity, which replaced Law No. 131 of 1970. This law permitted a relatively free private insurance market and established minimum capital and solvency requirements.
Law No. 20 of 2010 introduced compulsory health insurance for all residents.
Law No. 53 of 1957 established a national social insurance organization.
There are calls from within the Libyan insurance sector to amend and update existing legislation to keep pace with market developments and align with international standards.
2. Key Regulatory Features:
Foreign Direct Investment (FDI): Up to 49% FDI is permitted in the Libyan insurance industry.
Composite Insurance: Composite insurance (offering both life and non-life insurance) is generally not permitted in Libya.
Minimum Capital Requirements: Insurance companies must have a paid-up capital of not less than LYD 10 million. Reinsurance companies require at least LYD 30 million. These apply to both conventional and Takaful (Islamic insurance) operators.
Solvency Margins: Assets must exceed liabilities by a margin of 20% of net premium or 25% of net outstanding claims from the previous financial year, whichever is greater.
Reserve Requirements: Specific reserve requirements exist, for example, 47% of the preceding year's premiums for motor third-party liability.
Premium Rate Approval: Approval of premium rates is generally required.
Independent Audits and Actuaries: There is a requirement for independent audits and the appointment of actuaries.
3. Compulsory Insurances:
Motor Third-Party Liability (TPL) Insurance: This is a key compulsory class of insurance. Law No. 28 of 1971 dealt with compulsory insurance against civil liabilities from vehicle accidents.
Health Insurance: Compulsory health insurance for all residents was introduced by Law No. 20 of 2010. Private medical insurance (PMI) also became compulsory in 2012.
Professional Indemnity Insurance: Compulsory for the medical profession, with a minimum limit.
Shipowners' Liability for Marine Oil Pollution: A financial guarantee or insurance is required under the International Convention on Civil Liability for Oil Pollution Damage.
Workers' Compensation: This is entirely dealt with by the state social security system.
4. Non-Admitted Insurance:
Generally, non-admitted insurance (insurance placed with an insurer not licensed in Libya) is permitted with a few exceptions. However, some sources suggest that the law provides that insurance must be purchased from locally authorized insurers, with 100% of the gross premium paid locally, implying restrictions on non-admitted primary insurance.
5. Challenges and Developments:
Despite recent growth in the number of insurance companies, the market is still considered "weak and disorganized" by some international bodies.
There have been concerns about limited regulatory oversight, lack of clear rules for risk management, reinsurance partner selection, and oversight of investment portfolios.
Efforts are underway to develop a comprehensive strategy for the insurance sector, aiming to address distortions in the legal and regulatory frameworks, strengthen supervision, and increase insurance awareness.
It's important to note that due to the ongoing political and economic situation in Libya, the regulatory landscape can be dynamic, and it is advisable to consult with legal and insurance professionals in Libya for the most up-to-date and specific information.
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