In 2018, The Pensions and Insurance Authority (PIA) announced that it had placed one of the  Life Assurance Companies under compulsory liquidation,  for failure to pay its debts. I was distraught as I had a savings scheme in form of an endowment policy running with the Assurance Company. PIA also informed affected stakeholders to present their claims to the liquidator. 

I made my claim and was paid about a third of what had accumulated in my portfolio. 

In March 2023, PIA made another announcement informing stakeholders that by virtue of the  Insurance Fidelity Fund, established under the Insurance Act, all policyholders who had previously made claims with the liquidator ought to submit their claims which were to be paid out from the fund.

I followed the steps in the notice of making the claim and I was eventually paid.

My experience ignited my legal mind, as I did not pay much attention to what the Insurance Act provided regarding the fund. Therefore, I decided to delve a little bit more into the Fund and the rationale for its establishment.

The Insurance Fidelity Fund is established under section 180 (3)(b)of the Insurance Act No. 38 of 2021, which has continued the existence of the Fund that was established under section 109 of the repealed Act of 1997. 

According to the said section, the purpose of the Fund is that of indemnifying or otherwise protecting policyholders and other persons interested in the policies prejudiced by the inability of an insurer carrying on business in Zambia to meet its liabilities.

Under Section 110,  the Fund consists “all moneys paid to the Authority by way of annual or other periodic licence fees charged under this Act; all moneys recovered by, or on behalf of, the Registrar by the exercise of any right of action conferred by this Part; and all other moneys accruing to the Fund.

Section 111 reiterates the purpose of the fund of compensating persons who suffer pecuniary loss occasioned by any default of an insurer or broker licensed under this Act or any employee of such an insurer or broker in the course of, or in connection with, any insurance, insurance brokerage or related business.

When making my claim following the March 2023 announcement, I followed the steps set out in the regulations known as the Insurance (Fidelity Fund) Regulations No. 38 of 2021 which were promulgated pursuant to section 113 of the Act. 

You are probably wondering why I have made a fuss about claiming from the Fund. Well the reason is simple, in the past 5 years, many Zambians have been swindled out of their funds by investing in schemes that promise high returns.

Regulators have come out to warn the public about investing with companies that are not registered and regulated by the relevant institutions. 

Therefore to prevent being swindled, ensure that before investing your hard earned money in a company/entity, conduct basic due diligence processes as follows;

1. Ensure that the Company is duly registered ;
2. If the Company is registered and is offering investment products, conduct a further search to ensure that it is regulated by either the Bank of Zambia, Lusaka Securities Exchange PLC, PIA etc; and
3. Lastly, ensure that you are happy with the products being offered to avoid being inconvenienced.

Note that investing in regulated entities offers some level of protection as you may recover not all but some of your money due to the protective measures the regulators have put in place.

I hope you found my experience enlightening.