Honorable Ministers;

Managing Directors;

Distinguished participants;

All protocols observed.

You are all welcome to this one day workshop on “Insurance Contracts draft Law”.

It is now coming to three years since the National Bank of Rwanda was mandated to undertake the responsibility of supervising and regulating the Non-bank financial institutions of which the insurance industry is one.

Since that time a number of initiatives have been put in place in order to ensure that the Central Bank fulfills this challenging mandate. These initiatives include putting in place a legal and regulatory framework for the insurance sector and in this connection the new insurance law was enacted in March 2009 and a number of insurance regulations were issued. The purpose of the new legal framework is to ensure that the insurance sector is in line with the objectives of developing a viable, efficient, effective and sound insurance industry in Rwanda.

Distinguished guests, Ladies and Gentlemen;

Insurance sector is a catalyst to financial systems stability and growth through long term saving mobilization, resource allocation, risk diversification and protection of economy’s assets, while at the same time ensuring that customers or policyholders get quality services and are treated with fairness and equity.

The National Bank of Rwanda has taken another initiative in the process of strengthening the protection of the policyholder by amending the existing insurance contract law. The purpose of this draft law is to provide for the law relating to insurance contracts and set out certain mandatory terms and conditions with the objective of ensuring that the insurance contracts are fair and equitable to insurers, policyholders and other beneficiaries of insurance contracts.

The current Insurance Contract is governed by the Decree –Law nº20/75 of 20 June 1975 and has been modified and completed by the law no 01/2002 of 19/01/2002.

This decree law is over taken by events because it not updated and lacks many features.

The new insurance contract law to be discussed in this workshop is intended to fill up the existing gaps in the old law, so that it is able to match with today’s developments and sophistications of insurance businesses.

Globally the insurance business has developed over the years with new sophisticated products coming in. As businesses grow, the more the market failures increase, for example, market players tend to hide or give false information in relation to insurance products which ultimately affect underwriting process. As you very well know “policy wording” is a very critical process in underwriting risks in insurance business. Therefore, if underwriting is poorly informed, the risks will spill-over to other activities like operational, investment, liquidity and loss of reputation. This demonstrates the extent to which an effective “insurance contract law” that builds truthful information sharing behavior between insurance providers and clients is to the success or profitability of insurance business.

Ladies and Gentlemen ;

The new insurance contract law comes to facilitate the implementation of the existing law to develop a vibrant insurance sector that is competitive, profitable while safeguarding policyholder’s interest. In particular this law will help to reduce information asymmetry problem with its negative effects of moral hazard and adverse selection problems. It is intended to govern the contractual relationships between insurers and policyholders.

This law has been drafted by Mr. Carpenter an expert in drafting insurance laws and I am delighted that he is available and is going to lead the discussions explaining all the contents of this draft law and relevant policy issues.

The importance of involving all stakeholders to deliberate the contents of this draft law cannot be overemphasized and I therefore have a lot of expectations that your input will enrich further the contents of the draft law.

I wish you fruitful deliberations.

Thank you