WINDHOEK: The Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (Namfisa) warned the public on Wednesday that the operation of insurance company ‘U-Care’ in Namibia is in contravention of Namibian laws.
Specifically, the two institutions said U-Care’s operations are contravention of the Banking Institutions Act, 1998 (Act No. 2 of 1998) as amended, as well as the Long-term Insurance Act, 1998 (Act No. 5 of 1998) as amended.
The BoN said it directed U-Care last year to refrain from pursuing any further business activities in Namibia.
“Despite this directive, U-Care continued to operate in Namibia under the radar,” said a joint statement issued by the BoN and Namfisa on Wednesday.
The two financial institutions have recently been inundated with queries from the public wanting to know whether the business activities of U-Care are legal in Namibia .
“Through this joint public notice, both regulatory bodies are informing the general public that
the operations of U-Care in Namibia are in contravention of the Banking Institutions Act and the Long-term Insurance Act,” they reiterated.
The business model of U-Care was specifically found to be in contravention of Section 55A of the Banking Institutions Act of 1998, as amended.
According to the joint statement, the core activity of U-care is to introduce new members of the public to the business practice, whereby money in the form of a monthly fee is regularly accepted from each participating member of the public.
Participants are then encouraged and required to introduce or recruit new members of the public to the network in order to earn monetary rewards and progress in status.
The funds so obtained from the public are then allocated to participants as rewards, which principally come from the monthly contributions received from existing and newly recruited members.
On another front, the joint statement explained, U-Care contravened the Long-term Insurance Act (No. 5 of 1998) by acting as a funeral insurance intermediary without approval from the Registrar of Long-term Insurance.
The funeral cover was underwritten by Trustco Life Limited, which is duly registered as a long-term insurer, it said, adding that upon notification of these transgressions by U-Care, Trustco Life Ltd stopped underwriting the funeral cover benefits as from 31 May 2012.
However, it noted that members of U-Care who are holders of the funeral policy are advised to approach Trustco Life Limited on an individual basis to continue having their funeral policies underwritten by them, should they wish to continue such relationship.
Both the Bank of Namibia and Namfisa advised members of the public who have joined U-Care to discontinue their membership with immediate effect, while those who have intentions to join should desist from doing so forthwith.
“By transacting with or getting involved in the business practices of U-Care, such participating members of the public may equally become liable, since they will be contravening the Banking Institutions Act and the Long -term Insurance Act, and this could result in prosecution under those laws,” the two institutions warned.
In addition, charities and other organisations that were enticed to accept and receive donor funding from U-Care are also cautioned to cut their ties with U-Care Namibia, since any involvement with that company may present them with legal challenges that could tarnish their reputations.