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insurance

Collection of insurance premiums – Update on regulatory framework

Just before year end, the Financial Sector Conduct Authority (FSCA) published FSCA Communication 2 of 2018: Update on the future of the premium collection regulatory framework under the Short- and Long-term Insurance Acts.

The FSCA’s communication highlighted the various regulatory interventions being considered to address specific risks inherent in third party premium collection business models. It also confirmed that further industry engagements would be held during early 2019 to help inform the FSCA’s policy position on the future of the premium collection regulatory framework.

Based on these industry engagements the FSCA has now formulated a number of proposals to address the specific risks identified for the premium collection regulatory framework.

Regulatory proposals include:

  • identification and classification of premium collection related activities and the determination of appropriate remuneration for such activities;
  • criteria for qualifying intermediaries who wish to collect premiums on behalf of insurers;
  • treatment of premiums as trust monies;
  • reduction in the allowable period for the remittance of premiums by third parties; and
  • interim remuneration arrangements for intermediaries who perform premium collection related activities in direct collection models.

The latest published Position Paper, therefore, confirms the FSCA’s current thinking on a future regulatory model for the collection of insurance premiums in South Africa within the context of key regulatory and industry developments to date.

Interested parties are requested to submit written comments on the proposals outlined in the Position Paper by 10 May 2019 to the following email address: FSCA.RFDPremiumCollectionPaper@fsca.co.za.

For further information regarding this Communication and the contents of the Position Paper please contact the Regulatory Framework Department of the FSCA by emailing Eugene du Toit at eugene.dutoit@fsca.co.za.

Click here to download FSCA Communication 3 of 2019.

Click here to download FSCA Position Paper Future Premium Collection Framework.

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