(1)
An index insurance contract- (a) shall- (i) provide for the payment to the policyholder of a fixed sum of money referred to as the "the sum insured" which is determined in accordance with the value of one or more stated indexes; (ii) limit the liability of the licensed insurer to a specified maximum sum insured, above which a policyholder cannot purchase insurance cover;
(iii)
provide that the contract may only be purchased by persons who have an insurable interest in the specified insured risk and require the policyholder to acknowledge that he or she has an insurable interest, on the date that the contract is entered into;
(iv)
require the payment of the full premium at the time the contract is entered into or before the policy incepts, and in the case of subsidised premiums, the policy shall be issued and contract entered into, the moment the policy holder pays one hundred percent of his or her contribution;
(v)
prohibit cancellation of the contract by either party once the policy has incepted, except where the policyholder did not have an insurable interest at the time the contract was entered into;
(vi)
provide at least one fall-back methodology for determining the liability of the licensed insurer, and payments payable to the policyholder, in the event that the primary index is not available; and
(vii)
specify the process or mechanism for the resolution of any disputes under the contract; and
(i)
require, or provide for, the assessment of actual loss of the policyholder; or
(ii)
permit a grace period for payment of the premium beyond the inception of the policy.
(2)
An index insurance contract shall contain-
(a)
a statement that the contract is an index insurance contract approved by the Authority and that the contract is issued under, and in accordance with the Act and these Regulations;
(b)
statement that the contract is intended to provide insurance cover in relation to one or more insured risks, which must be specified in the contract;
(c)
a statement that payment under the contract is determined by the value of an index or indexes, which must be specified, and not on the basis of actual loss; (d) a statement of the maximum sum that may be insured under the contract;
(e)
a statement that there is a risk that-
(i)
no payment may be due to the policyholder under the contract, even though the insured event has occurred; or (ii) in the event that the insured event occurs and the policyholder receives a payment under the contract, the payment may be less than the losses and costs sustained by the policyholder as a result of the occurrence of the insured risk; (f) a statement that-
(i)
if the liability of the licensed insurer to make an insurance payment to the policyholder is triggered, the policyholder may be required to prove his or her insurable interest in the contract; (ii) if the policyholder cannot prove an insurable interest, the policyholder shall not be entitled to receive any payment under the contract; and (iii) the details of the consequences for the policyholder where the policyholder enters into an index insurance contract without an insurable interest in the contract; (g) a statement that the contract cannot be cancelled once it has incepted. (3) Notwithstanding regulations (1) and (2), an insurer may, subject to the approval of the Authority- (a) issue a hybrid index insurance contract that provides for payment against one or more indexes and the provision of other benefits on the basis of actual loss; (b) issue an index insurance contract where the index triggers payment by the licensed insurer before the occurrence of the insured risk, where the payment is designed, at least in part, to compensate the policyholder for meeting the costs of preparing for, and mitigating the effect of, the insured risk.
(4)
An index insurance contract shall specify- (a) the index or indexes which- (i) shall trigger the liability of the licensed insurer under the contract; and (ii) shall determine the amount of the payments to be made under the contract; (b) the period that the contract shall be in force and the period in respect of which cover is provided; (c) the details of the fall-back methodology that shall be used if the primary index is not available;
(d)
the assessment or other estimation of adverse impact that may trigger payment; and (e) any exclusions to which the contract is subject.
(5)
An index referred to in subregulation (4)(a) shall-
(a)
be objective and transparent; (b) be produced or verified by an independent third party and accessible to the licensed insurer and policyholders; (c) state the source of the data used for each index, (d) be supported by data that is sufficient and adequate to enable the licensed insurer to assess its insurance risk and;
(e)
enable the liability of the insurer and the amount of the payment due under the contract to be determined in a timely manner. (6) An index insurance contract shall require the policyholder to make a claim in the event that the index triggers the liability of the licensed insurer to make a payment under the contract but may require the policyholder to prove his or her insurable interest before payment is made.
