In a significant stride towards financial modernization and protection, Belize inaugurated its New Insurance Act on October 1, 2023.
The new legislation signifies a pivotal moment in Belize’s insurance regulatory framework by synthesizing previous acts into an expansive and progressive legal outline aimed at safeguarding both the Belizean population and international interests.
The new Insurance Act
Some of the key highlights of the New Insurance Act include:
- Introduction of Micro Insurance: One of the most noteworthy introductions under the New Insurance Act is the inclusion of microinsurance. This innovative addition bridges the protection gap and offers a vital disaster risk financing tool, particularly benefiting the low-income productive sector. It addresses the challenges faced by those who were previously unable to obtain insurance due to high rates in the commercial market or the unavailability of adequate insurance coverage.
- Transition to a Risk-Based Framework: The new Insurance Act represents a significant shift from a rules-based framework to a risk-based approach in insurance supervision. The rule-based approach requires compliance with rules irrespective of the underlying risk. The risk-based approach is more flexible than the rule approach, as it leaves the possibility to the financial institutions to consider the risks in their total.
- Alignment with International Standards: The combined effect of the new Insurance Act and the accompanying regulations positions Belize in compliance with the Insurance Core Principles of the International Association of Insurance Supervisors (IAIS) and with recommendations from the Financial Action Task Force (FATF). This alignment with international standards strengthens Belize’s standing in the global insurance landscape.
- Enhanced Inclusivity: The Act categorizes licenses for insurers conducting business in Belize and from within Belize, allowing for the inclusion of international insurers, captives, reinsurers, and other classes of insurers. These provisions support the sound development of inclusive insurance, with a focus on microinsurance and parametric products. This approach fosters financial inclusion and narrows the disaster-risk protection gap.
Belize’s commitment
Minister of State in Belize’s Ministry of Finance, Christopher Coye said that the Government of Belize is committed to the observance of international best practices, especially those that foster financial stability, economic development, financial inclusion, and protection of consumers.
He added that the new Insurance Act is a demonstration of that commitment, and expressed anticipation of the implementation of the legislation.
Similarly, Lilia Burunciuc, World Bank Country Director for the Caribbean countries said that the introduction of the new insurance act underscores Belize’s commitment to modernization, financial inclusion, and the protection of its citizens and businesses.
“ The inclusion of microinsurance supports those who face ongoing barriers to obtaining crucial coverage,” Burunciuc added.
Collaborative effort for robust legislation
The development of the new act has been a collaborative effort between the World Bank, the IMF – through CARTAC – and the Government of Belize.
It involved key stakeholders, including insurance market participants, government authorities, policymakers, and other experts. This inclusive approach ensures that the legislation is tailored to meet the specific needs and realities of Belize.
Aligning with Anti-Money Laundering initiatives
The new legislation seamlessly integrates with existing efforts aimed at bolstering Belize’s Anti-Money Laundering and Counter Financing of Terrorism protocols, thereby providing an added layer of fortification to the country’s financial and regulatory framework.
Furthermore, the act’s development occurred under the auspices of the World Bank’s Financial Solutions for Climate and Natural Disaster Risks Program in the Caribbean, with financial support flowing from the UK Foreign, Commonwealth & Development Office.
