The FSCA has published the draft exemption for Microinsurers offering Credit Life from Rule 2A.10.1 of the Policyholder Protection Rules which states “A microinsurance policy or a funeral policy may not prescribe that a policy benefit payable as a sum of money is payable directly to a service provider.”
FSCA Communication 6 of 2019 notes that credit life policies offer policy benefits to satisfy all or part of a financial liability to a credit provider on the happening of a death event, health event or a disability event, in the event of unemployment, or other insurable risk that is likely to impair a person’s ability to earn an income or meet credit obligations. Accordingly these policies are often structured to pay all of part of the policy benefits directly to a credit provider.
A practical challenge exists in complying with Rule 2A.10.1 in the context of microinsurance policies underwritten under the credit life class of life insurance business as set out in Table 1 of Schedule 2 to the Insurance Act. The FSCA believes that there is justification in departing from the requirements of Rule 2A.10.1 in the context of such policies.
As a result, the FSCA intends to exempt microinsurers from compliance with Rule 2A.10 insofar as it relates to a microinsurance policy underwritten under the credit life class of life insurance business as set out in Table 1 of Schedule 2 to the Insurance Act.
The FSCA believes that the exemption will not be contrary to public interest nor will it prejudice the achievement of the objects of the PPRs.
Interested parties are invited to submit comments on the draft Exemption Notice in writing on or before 21 August 2019 to Lezanne.firstname.lastname@example.org.
Click here to download FSCA Communication 6 of 2019 (Insurance).
Click here to download the draft FSRA Exemption Notice.