The FSB published details of a settlement reached with a company trading as “MyLawyer” (the respondent) who acknowledged that it had contravened section 7(1)(a) of the Short-term Insurance Act (STIA).
From November 2011, MyLawyer marketed and sold short-term insurance policies to the public. The policies provided clients with legal advice, legal representation and litigation services.
For a premium of R99, clients were provided with a benefit amounting to R175 000 to cover legal expenses for themselves and their families. By law, these benefits should be underwritten by a registered insurer but, in this case, it was not. The respondent is also not registered as an insurer.
MyLawyer used the premiums received to pay business expenses and settle claims.
In mitigation, the settlement agreement states that the contravention was “…never deliberate or intentional and done bona fide, based on research, consultations with industry experts and legal opinion.”
The respondent is currently in the process of securing an underwriter for its business. I tried their website for more information, but the site merely states “this website is under construction”.
The parties agreed to a penalty of R200 000.
Please click here to download the settlement agreement.