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Legislation proposed to regulate industry

NUKUALOFA, Tonga (Matangi Tonga, May 13, 2009) – Tonga needs to enact insurance legislation, and could do so before 2010, says a newly released report on Insurance and Related Topics that was prepared for Government's National Economic Development Council.

Prepared by Stuart Twaddle of Insurance Outsource Services Ltd. from New Zealand the 32-page report was presented to local insurance companies and business community on May 8.

The report recommended that legislation be introduced in the main areas of insurance regulation, the insurance of government assets, funding of disaster recovery, Compulsory Third Party Motor Vehicle Insurance, workers compensation, limitation of actions for death/personal injury or property damage, and Building Construction Standards.

Tonga's Solicitor General 'Aminiasi Kefu said although there was no legislation in place insurance companies are bound by the laws of contract. " That is, contract law which ensures that the insurance companies will provide for their obligations under the insurance policy."

He clarified this area of law is developed here in Tonga, and there had been some cases regarding disputes over insurance policies


The report said in recommending an insurance legislation, the next step is for Government to set up a committee with members possessing of skills and experience in the various fields of insurance, legal, medical, financial and business to quickly and efficiently carry out the required work.

The report was hopeful if the committee was given the authority to have Ministries give urgency to requests to appoint public servants with skills and locate and instruct advisors, it would be reasonable to have a draft legislation by March 31, 2010.

Stuart highlighted the Compulsory Third Party Motor Vehicle Insurance and the Workers Compensation Insurance could assist in Tonga's development.

"Without a doubt Tonga must have a Compulsory Third Party Motor Vehicle Act because currently many victims do not receive any compensation for a loss because the vast majority of negligent parties do not have insurance nor have the ability to pay compensation.

"The same goes for the Workers compensation insurance, where an act can legislate that workers or their dependants be compensated following death or injury at work." he said.

The report was funded by the National Economic Development Council which was set up in 2007 with a budget of $15 million to fund private sector initiatives.

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