Sonas

History of the insurance sector

In 1967 on the 2nd June, under the regime of Joseph Desiree Mabutu (“Mabutu”), Law No 67/240, Article 1 established a monopoly for the State Insurer Société Nationale d’Assurances S.A.R.L (“SONAS”).

There were seven laws passed during Mabutu’s time relating to insurance:

1. Ordinance-Law No. 66/622 of 23/11/66 regarding the creation of compulsory insurance; 2. Ordinance-Law No. 66-97 of 14 March 1966 regarding Insurance Codes for marine, river and lake transport; 3. Ordinance-Law No. 67/18 of 17/01/67 regarding the modification of Ordinance-Law No. 66/622 of 23/1/1966; 4. Ordinance-Law No. 67/240 of 02/06/1967 granting a monopoly on insurance to the Société Nationale des Assurances SONAS (National Insurance Company); 5. Law No. 73-013 of 5 January 1973 regarding compulsory civil liability insurance for land motor vehicles; 6. Ordinance-Law No. 74-007 of 10 July 1974 regarding compulsory civil liability insurance for construction entities; 7. Law No. 74-008 of 10 July 1974 regarding compulsory fire insurance for specific buildings. Through the creation of the SONAS monopoly, and the absence of any competition, SONAS did not evolve with the changing face of insurance. As such, the DRC insurance market remained largely undeveloped. A clear indication of this is that in 2014 SONAS placed USD 82 million of premium, which is substantially less than the potential insurance market. A simple comparison between Gross Domestic Product (“GDP”) and Gross Written Premium (“GWP”) shows this. The DRC generated a GDP of USD 32.69b in 2013, in line with Ivory Coast whose growth was USD 31.06b. While the GWP in Ivory Coast was USD 500m, USD 82m only were generated in the DRC. Common expectation is that an additional $400 million of premiums are bought for the Congo, without Sonas being involved. This is known as the informal insurance sector.

Due to the increasing size of the informal sector, and the continued dissatisfaction regarding the monopoly that SONAS currently has over the insurance sector, the Congolese Government concluded that SONAS was unable to satisfy the insurance market. Accordingly, the Government embarked upon a liberalization project in 2005 in order to end SONAS’s monopoly and privatise the insurance sector.

Privatisation of the Insurance Sector

In 2016, SONAS still enjoys a monopoly over the insurance sector, however that is set to change. In 2014, Parliament approved a new insurance bill that opens up the insurance market to investors. The new bill was subsequently sent to the senate and approved by the National Assembly on the 14th January 2015.

On 17 March 2015, Law number 15/005 (“the Insurance Code’) was promulgated by the President Joseph Kabila. The Insurance Code repeals the SONAS Decree, thereby privatising the insurance sector. In accordance with article 512 of the Insurance Code, it would come into full force and effect on 17 March 2016.

Further, the Insurance Code repeals the following laws: 1. Law of 25 June 1930 regarding supervision of life insurance companies, 2. Ordinance-Law No. 66/622 of 23/11/66 regarding creation of compulsory insurance, 3. Ordinance-Law No. 66-97 of 14 March 1966 regarding Insurance Codes for marine, river and lake transport, 4. Ordinance-Law No. 67/18 of 17/01/67 regarding the modification of Ordinance-Law No. 66/622 of 23/1/1966, 5. Ordinance-Law No. 67/240 of 02/06/1967 granting a monopoly on insurance to the Société Nationale des Assurances SONAS (National Insurance Company) 6. Law No. 73-013 of 5 January 1973 regarding compulsory civil liability insurance for land motor vehicles, 7. Ordinance-Law No. 74-007 of 10 July 1974 regarding compulsory civil liability insurance for constructors, 8. Law No. 74-008 of 10 July 1974 regarding compulsory fire insurance for specific buildings.

On 26 January 2016 law number 16/001 was signed by the Prime Minister and the Minister of Finance. This formalises the establishment, organization and functions of the Regulatory Authority and Insurance Supervision body (ARCA). This law was promulgated in accordance with Article 385 and 396 of the Insurance Code.

Despite the radical regulatory changes, SONAS currently maintains a monopoly over the insurance market. Prior to investors being able to enter the DRC insurance market, in accordance with the Insurance Code, three steps need to be completed: 1) The appointment of the Members of the ARCA and related committees; 2) The finalisation of the financial and fiscal regime of prospective insurance companies in terms of the Insurance Code; 3) Approval of license applications of prospective insurance investors All insurance brokers that are currently operating in the DRC will be required to apply for a license from the ARCA.

Future of the insurance sector

In accordance with the Insurance Code, the Government has listed the following compulsory insurance covers within the Democratic Republic of the Congo:

• Third Party Motor Insurance; • Aviation Civil Liability; • Marine Civil Liability; • Construction All Risk; • Professional Liability; • Decennial Liability Insurance/Inherent Defect Insurance; • Fire Insurance; and • Imported goods Cover. In accordance with Article 286 of the Insurance Code, non-admitted insurance is prohibited: ‘It is prohibited to underwrite abroad a direct insurance for persons, property or liability located in the national territory or with an unlicensed company to carry out insurance operations in the Democratic Republic of the Congo, in compliance with the provisions of Article 400 of this Act.

Reinsurance ceded abroad on more than 75% of a risk regarding a person, property or liability located in the Democratic Republic of the Congo, except for the classes stipulated in 4, 5, 6, 11 and 12 of Article 402, requires consent from the Minister responsible for insurances, after consultation with the insurance regulatory and supervisory Authority.’

Currently international investors are awaiting the commencement of ARCA operations. There is no confirmed date for this.

Companies that have committed to investing in the DRC insurance sector:

• SONAS; • ICE Africa (www.iceafrica.com ); • the Rawji Group; • Medgulf.