Abstract

This project begins by explaining how insurance practice evolved in Cameroon, that is, from the traditional to the modern form of insurance practice in Cameroon and how colonial rule affected insurance law institution in Cameroon.

Following this is the main research problem which explains reasons for government control of insurance companies in Cameroon.

Also, we have the research question. It examines what an insurance company is, the reasons for the supervision of insurance activities in Cameroon, the methods used and the extent of supervision and control. Besides this is the research objectives which are both general and specific in nature.

The significance of this research has clearly been explained. Its exploits the reason for government control and the impact of this control.

This research further explains the extent of government control, that is, the organs and institution put in place to make sure that insurance companies in Cameroon are properly supervised, the weaknesses of this supervision and some recommendations for proper control.

CHAPTER ONE

BACKGROUND

1.1 The Historical Evolution of Insurance Law in Cameroon

Historically, Cameroon has undergone a triple colonial effect. That is the German, the French rule and the British rule.

The Germans established their rules in Cameroon after the signing of an annexation treaty with King Akwa and King Bell in 1884 by Gustav Nactigal who was Bismarck’s envoy, that is the German chancellor at that time.

Cameroonians were thus subjected to the imperial law which was German law by virtue of article 9 of the Berlin West African Conference organized by the German chancellor with the aim of consolidating German’s rule in Cameroon.

The Germans ruled Cameroon for 32 years and within these years Cameroon practiced and observed German laws. On the 14th of February 1916, German rule came to an end in Cameroon given their defeat in the First World War by France and Britain  . Britain and France partitioned Cameroon into two uneven portions with the France taking the lion share.

By virtue of Article 9 of the Versailles treaty (A treaty organized in France after the first world war in 1919, where in Germany surrendered her rule over Cameroon to Britain and France). British and French laws were made applicable in Cameroon .

On the 14th of February 1916, German rule came to an end in Cameroon given his defeat by the British and French forces in the First World War Following the treaty of Versailles in 1919, Cameroon was partitioned into two with the Lion share given to France and the other half given to Britain.

Britain administered her own portion of Cameroon through its territory Nigeria while France on her part merged Cameroon to his French West African territory.

Looking at article 9 of the Versailles treaty, British and French laws were made Applicable in Cameroon. So Cameroon before independence in 1961 underwent a triple colonial effect as seen above and in each was subject to the laws of her colonial master.

After the independence in 1961, Cameroon became a federal Republic State and inherited all the existing laws in both federated states. This dual system thus accounts for both the civil and common law being practiced in Cameroon.

Nigerian and Britain law was made applicable to Southern Cameroon by virtue of Ordinance Vo.5 of 1924. Section 11 of the Southern Cameroon high court Law of 1955 provided that Cameroon shall for the time being respect and enforce English laws which were enforced in England on the first of January 1900. This thus included the insurance sector of Southern Cameroon.

On the part of French Cameroon, the laws of French equatorial and French West Africa did not apply ip so facto in Cameroon. The decreeof22May1924 made it possible for the French Equatorial law to be applicable in Cameroon. This resulted in the introduction of the civil code to French Cameroon.

The Governor of French Cameroon rendered other French laws applicable to French Cameroon. For instance, the1930insurancelawof13thJuly1930 which was passed by legislator in France was made applicable 7 years after in Cameroon by Decreeof19March1937.

Also an ordinance of 29th September 1945 rendered applicable in Cameroon all basic French insurance legislation thereby importing the French law of June 1938 regulating insurance companies .

Besides the coming of the Europeans with their laws, Cameroonians had had the various ways and arrangement for spreading amongst the members the effects loss which fall directly upon one or a few of them. This was made possible by the homogenous nature of communities in those days.

For instance, in case of fire destroying a member house, the whole community would come together and put in their efforts to see that house is constructed so to in case of birth and untimely death they would also make contribution to support the victim (bereaved) person.

Cameroonian in this sense practicing what was letter term by some authors. The Traditional form of insurance. It should be noted that this form of insurance based of the humanitarian African Philosophy that everybody is expected to be his brother’s keepers.

This echo of insurance practice could be still be found in some villages in the North West region of Cameroon like the Akum people and the Nkwen and Mankon people of North West region of Cameroon.

In this communities, they practice what is “term Njangi” by this contribution are made and kept by a treasurer who would only disburse a particular amount to any member of the group who suffers a loss to enable him or her get back to her feet there by lighting the burden on her. Even though this system of insurance was good, it was limited in scope since it was concern with the family and the amount of capital was also small to cover great loss.

So due to the coming of the Europeans in the 19thcentury there was the need to develop the insurance sector of Cameroon given that their coming in entailed a lot of great project lithe the construction of bridges, rail ways and roads. This also led to rapid urbanization in Cameroon which killed the spirit of homogeneity amongst Cameroonians.

Thus West Cameroonians followed the modern insurance system introduced by the British Merchant, while East Cameroonian adopted insurance principles and practices of metropolitan France and until 1950 there were no insurance companies operating in Cameroon.

Insurance contracts were establish in France and Britain but this was letter on streamlined by the introduction of agents who represented the various insurance companies locally but maintained their headquarters in their mother country.

The royal exchange Assurance was the first insurance company to be given a branch in Nigeria in 1921 which letter on in the 1960’s moved to Cameroon . Their principal agent was Barclays Bank was their principal agent.

Also in French speaking Cameroon, the first insurance agencies which operated in Douala in 1953 were Groupement franciasd’Aassurances which was letter on called societé camerunaise, Agence de compagnie franciause letter on known as Assurance Generale de France now chanas et privatd’Assurance eventhough they have gone into liquidation now there still stand the history of insurance practice in Cameroon in the modern sense.

Upon independence, the federal Republic of Cameroon became involved in all aspects of the economic life of Cameroonians. By this, the government had to bring up a framework to regulate and consolidate the Business life of Cameroonians and the insurance market was one of their main concerns.

They also aimed at restricting the free flow of foreign exchange into Cameroon thereby encouraging Cameroonians to set up large business markets not excluding the insurance market which was at the core of the emerging nation-Cameroon.

The first of these legislations were ordinance No. 62 DF-36 of 31st March 1962 fixing the legislation applicable to the operation and organization of insurance and Decree No 62 DF-437 of 18th December 1962 stipulating regulation relating to the investment of insurance organization in the federal Republic of Cameroon .

Furthermore, foreign insurance companies were merged to suit domestic concern but they however still maintain close ties with their parent companies both in Britain and France.

The first national insurance company was established in 1965 called Assurance Mutulles Agricoles du Cameroon (AMACAM)it first toots the form of a cooperative society having been created by a chamber of Agricultural, forestry activity which was agriculture.

After reunification in 1966 and the creation of the unitary state in 1972, the Cameroonian government’s focus was to codify and unify the insurance sector in Cameroon that is both the English and French speaking Cameroon.

This was motivated by the desire to harmonize, unify and integrating insurance. The process of harmonizing and integrating insurance laws in Cameroon upon independence right up to the unitary state system was practicing both the civil and common law system. This thus mode it difficult for insurance claims to be settled.

This thus led to the adoption of some insurance laws through reforms. This was made possible by the holding of several interdisciplinary conferences in Yaounde, in 1976, Lome (Togo) in 1976, and Yamoussouko (Côte d’ivoire) in 1986 with the objective of searching a viable solution to compensation of road traffic bodily injuries .

Other provision like the revision of the rating system, revalorization like the revision of the rating reorganization of compensation structures and competition of insurance companies.

Despite all these effort made by the above mention three countries, the solution to compensating bodily injury arising led to the holding of another conference in 1989 which aimed at reforming the compensation system in the three countries.

The three countries succeeded in adopting a particular law laying down an automatic ceiling for the compensation of road traffic accident.

At the initiative of the conference international des controls d’Assurances (CICA) and with the aim of economic integrated as the imperative, was treaty was signed in 1922 creating an integrated organization of insurance markets, called la conference interafricaine des Marchésd’Assurance (CIMA).

This treaty which created a regional control and instituted a single legislation the CIMA code now govern insurance markets the signatory states.

So looking at the historical background of insurance law in Cameroon, one can say that the process of harmonizing the insurance market in Cameroon was a gradual one beginning from the colonial era, to the federal system right up to the unitary system and finally the adoption of the CIMA code which served as the all relying legislation for Cameroon and the rest of its signatories as far as insurance law in Cameroon was concern.¬¬

1.2 Statement of Research Problem

In the past years, insurance companies in Cameroon have failed to meet up with their obligation are of the reason for such failure is fraud resulting from financial failure of the companies. Whatever might have resulted to such failures is not quite necessary but for the fact that such failures have a great impact on the policy holder as well as the third party claimant.

For this reason, there is a need for the government to lay down rules and regulations governing the insurance market of Cameroon. Secondly, insurance companies are mostly quick to receive premiums but are reluctant to pay indemnity to the insured.

Thus there is a great problem as far as insurance policies are concern. So it brings about the need for the government to setup institutions, backed by laws to enable the smooth functioning of the insurance companies, with the protection of the insured being considered.

Also, the fact that the general public of Cameroon lacks the basic knowledge and understanding of an  insurance contract and how the principles on insurance operate, there is a high tendency that the insured has a pre-conceived thought of what ought to be  which may be different from what the insurance company does actually.

This often result from the insured putting all blames in case he/she is not indemnity on the insured or sometimes, some insurers become so dishonest such that they end up not settling the insured. In order to solve this problem, the government had to bring in laws governing an insurance contract.

All these constitute the research problem of this project and it from these problems that we will get to know the nature and extent of government control of insurance companies in Cameroon.

1.3 Research Question

The research brings out the following Question:

1. What can be said about the insurance market of Cameroon?
2. Why has the government decided to control and regulate the activities of these insurance companies?
3. What methods have been used by the government to regulation of insurance companies?
4. To what extent has the government gone in its control?

Read More: Government Control and Supervision of Insurance Companies in Cameroon