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Establishing Insurance Regulation and Supervision Framework in Democratic Republic of Congo

Project Development Objective (PDO)

This project aims to establish a regulatory and supervisory framework for the insurance sector in Democratic Republic of Congo, which will foster the sector’s sound liberalization and development.

Background

Since 1967, SONAS (Société Nationale d’Assurances), a state-owned insurance agency, has enjoyed a legal monopoly that has prohibited the development of insurance services in the Democratic Republic of Congo and has made it hard for local or foreign companies to operate in the insurance sector. 
Congolese authorities have been working to reform the national insurance sector, and in 2015, the country’s parliament passed a new law to liberalize the insurance market, effective from March 2016 onward. In addition to eliminating SONAS’s monopoly, the new Insurance Code provides the legal framework to establish an Insurance Regulation and Control Authority (Autorité de Régulation et de Contrôle des Assurances, or ARCA) and defines market and prudential rules applicable to insurance and reinsurance companies.
Following a decree about the operationalization of the ARCA, which was prepared with the technical support of the World Bank Group, authorities have requested FIRST (Financial Sector Reform and Strengthening) Initiative funding to help them to start building the capacity of the ARCA, as well as to draft supervisory policies and insurance regulations.

Activities

The envisaged activities of this technical assistance are:
1.  Developing a medium-term supervisory action plan and identifying the needs for new regulations
     and supervisory approaches, as well as proposing sequenced and prioritized measures to
     gradually move to an effective risk-based regulatory and supervisory regime
2.  Supporting the drafting of regulations, policies, and medium-term action plans on implementing
     (a) the new supervisory agency’s governance and decision-making processes, (b) off- and on-site
     supervision, and (c) supervisory intervention and enforcement
3.  Preparing key draft insurance regulations in support of the new Insurance Code, including
     provisions for (a) licensing, change of control, and beneficial ownership; (b) corporate governance
     and risk management; (c) capital adequacy; (d) accounting standards; and (e) disclosure and
     reporting requirements (financial statements and prudential information). 
4.  Providing training to help build the capacity of ARCA’s supervisors. Training materials are to
     include policies and procedures for assessing new requests for insurance company licenses.

Expected Outcomes

The expected outcomes of the project are:
1.  Adoption of a medium-term plan to build an effective insurance regulatory and supervisory
    regime 
2.  Establishment of a clear governance structure and supervisory policies 
3.  Adoption of a clear regulatory framework that covers licensing, accounting standards, reporting
     requirements, disclosure, capital, corporate governance, and risk management 
4.  Trained personnel capable of performing supervisory duties