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Investment policies to medical schemes – Exemption proposed for insurers

The FSCA has published Communication 17 of 2020 to inform stakeholders that a draft general exemption has been published for further comment.

Due to the different meaning attributed to the term “fund” brought about by the Insurance Act, 2017, some unintended consequences has come to the attention of the FSCA. Therefore, the FSCA will be proposing amendments to the Regulations under the Long-term Insurance Act, 1998 (Act 52 of 1998) (LTIA) to exclude investment policies, where a medical scheme is the policyholder, from the ambit of Part 4 of the Regulations. Pending this amendment to the Regulations, the proposal is to, in the interim, exempt certain insurers from the limitations in Regulations 4.2(1) as set out in Notice containing the draft exemption.

The extent of the proposed exemption would be:

Long-term insurers that offer investment policies, and any person who acts as intermediary between such an insurer and a medical scheme in respect of an investment policy or proposal for an investment policy, are hereby exempted from Regulation 4.2(1) of the Regulations under the Long-term Insurance Act, 1998 insofar as it relates to an investment policy where the policyholder is a medical scheme.

Stakeholders are invited to submit comments regarding the draft general exemption in writing on or before 12 May 2020 to FSCA.RFDStandards@fsca.co.za.

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