Regulatory reminders on insurance legislation

Compli-Serve

Long-term Insurance Act 52 of 1998 (LTIA)

This serves as a reminder that Policyholder Protection Rules 13 (Data Management under 'Project Performance and Acceptable Service' section) and 20 (Termination of Policies under 'No Unreasonable Post-Sale Barriers') will commence on 1 January 2020.

Amendments will be made to the governance and oversight requirements relating to binder agreements (reg 6.2A), and to the requirements, limitations and prohibitions relating to binder agreements (reg 6.3), from 1 January 2020.

Data
The binder agreement will have to require the binder holder to provide the insurer with access to up-to-date, accurate and complete data (in accordance with reg 6.2A(2)) on a daily basis, to ensure that the insurer is able to comply with any regulatory requirements relating to data management, including any requirements provided for in the Policyholder Protection Rules (PPRs):

• The requirement that the insurer must, before entering into a binder agreement, be satisfied that the binder holder has the operational ability and IT systems to provide access to data as and when requested comes into force on 1 January 2020.
• The requirement that the binder holder must provide accurate and complete data on a monthly basis for funeral and assistance policies and on a daily basis for all other policies comes into force on 1 January 2020.

The Financial Sector Conduct Authority (FSCA) has extended the time to comply with reg 8.2(2) to 1 February 2020.

Regulation 4.2(3) and reg 8.2(2) issued under the Short-term Insurance Act 53 of 1998 (STIA) and LTIA respectively, deal with the requirement that all premiums collected by an independent intermediary must be collected into a separate bank account, which may only contain monies collected from policyholders (and not the funds of the independent intermediary)

Recently the FSCA published a communication on its website titled FSCA Communication 7 of 2019 dated 27 September 2019, which extended the period of compliance with certain regulations pertaining to premium collection by independent intermediaries in terms of both the STIA and the LTIA.

Communication 7 specifically provides that the FSCA has agreed to extend the period of time in which to comply with reg 4.2(3) issued under the STIA and reg 8.2(2) issued under the LTIA, from 28 September 2019 to 1 February 2020. 

Short-term Insurance Act 53 of 1998 (STIA)

This serves as a reminder that Policyholder Protection Rules 13 (data management) and 19 (termination of policies) will commence on 1 January 2020.

Amendments will be made to the governance and oversight requirements relating to binder agreements (reg 6.2A), and to the requirements, limitations and prohibitions relating to binder agreements (reg 6.3), from 1 January 2020.

Data 
The binder agreement will have to require the binder holder to provide the insurer with access to up-to-date, accurate and complete data (in accordance with reg 6.2A(2)) on a daily basis, to ensure that the insurer is able to comply with any regulatory requirements relating to data management, including any requirements provided for in the PPRs:

• The requirement that the insurer must, before entering into a binder agreement, be satisfied that the binder holder has the operational ability and IT systems to provide access to data as and when requested comes into force on 1 January 2020.
• The requirement that the binder holder must provide accurate and complete data on a monthly basis for funeral and assistance policies and on a daily basis for all other policies comes into force on 1 January 2020.

The Financial Sector Conduct Authority (FSCA) has extended the time to comply with reg 4.2(3) to 1 February 2020.

Regulation 4.2(3) and reg 8.2(2) issued under the STIA and LTIA respectively, deal with the requirement that all premiums collected by an independent intermediary must be collected into a separate bank account, which may only contain monies collected from policyholders (and not the funds of the independent intermediary).

In this regard, also refer to FSCA Communication 7 of 2019 dated 27 September 2019, which provides that the FSCA has agreed to extend the period of time in which to comply with reg 4.2(3) issued under the STIA and reg 8.2(2) issued under the LTIA, from 28 September 2019 to 1 February 2020.