MASERU – The High Court will on Friday hear the challenge by Prosperity Insurance Brokers against the cancellation of its operating licence by the Central Bank of Lesotho (CBL).
The central bank cancelled the operating licence for Prosperity with effect from October 29 2009 for allegedly violating the country’s insurance regulations.
A senior manager at Prosperity, Ratlelase Koote, however said the company was not aware of any regulations it had violated.
He said the High Court will hear Prosperity’s appeal against the CBL on Friday.
“We just heard on radios that our licence had been cancelled but we are not aware of any law that we have broken,” Koote said.
“Our clients should just relax. We need their support on March 26,” he said.
In a statement released on March 10, the CBL said it had cancelled the operating licence for Prosperity for failing to comply with insurance regulations 19 (2) and (3) of 1985.
CBL public relations officer, Thato Mohasoa, said the law stipulated that “monies collected by insurance brokers in respect of insurance business shall be paid to the insurance (company) concerned within 60 days after the commencement of such insurance”.
“While (regulation) 19 (3) says a person or company which takes out general insurance business policy shall pay the insurance within (a) 60 days after the commencement of the insurance or (b) such lesser period the insurance may stipulate,” Mohasoa said.
He said Prosperity had failed to comply with this regulation, forcing the central bank to revoke its licence.
Mohasoa said Prosperity has been “collecting monies from people that they did not take to insurance companies”.
The bank warned people to refrain from having any business dealings with Prosperity “as it is operating outside the perimeters of the Insurance Act 1976 and it’s Implementing Regulations of 1985”.
The decision to cancel Prosperity’s licence has triggered panic among clients who expressed fears that they might lose out on their insurance policies.
A client who refused to be named said he had been paying premiums with Prosperity over the past three years.
“I took life cover with Prosperity that covered my family and parents,” he said.
“I have been paying M130 per month for the premium and I fear that all that money could be gone because I know they won’t refund it.
“From the announcement that was made on radio we heard that their licence was cancelled last year but they continued deducting money from our salaries.”
The client said he had tried to cancel his contract last week but a secretary at the company had sought to reassure him that Prosperity was resolving the issue.