Insurance Code Reform: Microinsurance Makes Its Entry

Until now absent from the Insurance Code, microinsurance is about to receive its own legal framework. The draft bill amending Law No. 17-99 establishing the Insurance Code introduces a specific regime targeting low-income populations, with the ambition of facilitating access to insurance coverage that remains underdeveloped. Behind this innovation lies a broader objective: gradually expanding the pool of insured individuals in a market whose growth potential remains significant. To preserve the social purpose of these products and contain their costs, lawmakers intend to regulate them through caps on premiums, compensation and benefits, which will be determined by regulation. The administration will also be empowered to define lists of coverage exclusions as well as ceilings applicable to deductibles. The reform subjects access to this regime to several formal requirements. Contracts will have to prominently display the wording “Microinsurance Contract” on the first page and may include only the guarantees authorized under this framework. Otherwise, they will fall under the general insurance regime. The draft also places strong emphasis on readability. Contracts will have to be written in simple, concise and understandable language, with limited use of technical terminology. This orientation reflects the intention to open insurance services to populations that are sometimes distant from traditional financial mechanisms. However, it is in the applicable rules themselves that the reform introduces its clearest break. The first major change concerns compensation deadlines.
Insurers will be required to pay compensation or benefits within a maximum period of five working days after receiving the documents specified in the contract. They will not be allowed to request any additional documentation that was not initially listed. This requirement is even stricter than under ordinary law, where insurers retain the right to request missing documents in a single request. At the same time, the timeframe granted to policyholders for declaring a claim is being extended. It may not be set at less than ten days from the moment the insured becomes aware of the event. Perhaps the most distinctive provision of the reform concerns property damage coverage. Contracts covering property damage may provide for the payment of a predefined lump-sum benefit. This provision represents an exception to the indemnity principle that traditionally underpins property insurance.
The objective is to simplify claims management and reduce administrative costs for products designed for large-scale distribution. The regime governing premium payments appears, however, more stringent. In the event of non-payment at maturity, the contract may be automatically terminated as early as the following day. The insurer must nevertheless warn the policyholder at least fifteen days in advance about the consequences of payment default. Failing this, termination will only become effective on the thirtieth day following the due date. The reform ultimately rests on a key assumption: microinsurance should gradually broaden market access to segments of the population that remain insufficiently covered today. However, much will depend on future ceilings for guarantees and contributions, which will need to strike a balance between affordability for households and economic sustainability for operators. Stronger Protection for Policyholders
Beyond these specific measures, the reform more broadly rebalances the relationship between insurers and policyholders. Where a contract provides for forfeiture due to late notification of a claim, insurers will no longer be allowed to reduce or deny compensation unless they can demonstrate that they suffered actual prejudice as a result of the delay. The burden of proof will rest with the insurer. The draft also prohibits forfeiture where the insured can demonstrate that an unforeseen circumstance or a force majeure event prevented compliance with the prescribed deadlines.
K.M.