The 7th Insurance Regulatory Seminar is one event not to miss if you are involved in the financial services industry. This year’s seminar was certainly packed with important information.
There can be no doubt that a lot of what was discussed over the past few years will come to fruition in 2017. While parliamentary requests led to delays in certain areas, steps are in place to start implementing change on a priority basis.
Amendments to the Long- and Short-term Insurance Act Regulations and Policyholder Protection Rules will be given effect to in two tranches:
- Tranche 1 will focus on certain conduct of business regulatory reforms that cannot be deferred to the enactment of the proposed Conduct of Financial Institutions Bill and
- Tranche 2 which aims to ensure alignment with the Insurance Bill, and focus on prudential matters.
The information below is taken from a presentation by Jo-Ann Ferreira of the FSB.
Tranche 1 amendments will include a number of “conduct of business” reforms that can be given effect to within the existing regulatory framework, and includes:
- The Retail Distribution Review, specifically the Status Update: Retail Distribution Review Phase 1 published on 10 November 2015
- the Complaints Management Discussion Document published in October 2014 and the Complaints Management Thematic Review published on 17 October
- draft amendments to the Binder Regulations that were published on 11 July 2014 for public comment until 1 September 2014, the finalisation of which was deferred until the publication of the detailed Retail Distribution Review Phase 1 proposals
- certain matters identified in the consultations on the Technical Report on the Consumer Credit Insurance Market in South Africa published on 3 July 2014, which signalled concerns with respect to consumer abuses in the consumer credit insurance market
- the draft Information Letter on Advertising, Brochures and Similar communications published on 13 December 2013 for comments by 28 February 2014
- appropriate minimum requirements for claims management
- additional critical protections for policyholders identified through supervision (principles to inform premiums and premium reviews, minimum data governance requirements and negative option marketing and the like)
- alignment with the International Association of Insurance Supervisors (IAIS) Insurance Core Principles, November 2015, specifically ICP 19
- certain proposals of the Ombud for Long-term Insurance and the Ombud for Short-term Insurance relating to improved policyholder protection
- certain matters identified in the proposed Declaration of undesirable or irregular business practice – Charging of fees by insurers in addition to premiums published in May 2014
- alignment, in certain respects, with the Financial Advisory and Intermediary Services Act, 2002
- closing of regulatory gaps identified in existing provisions, effect improvements to certain provisions and effect technical amendments to clarify the intent and purpose of certain provisions requirements and negative option marketing and the like)
Special Focus Areas
- The FSB made it abundantly clear that changes effected by the industry must be geared towards enabling it to demonstrate its Treating Customers Fairly Culture. This will be monitored on a regular basis, and will form part of the reporting duties which will replace the annual FAIS Compliance Report.
- Binder agreements will receive a lot of scrutiny. Despite numerous interventions and directions from the Regulator, very little appears to have been done by many industry players, other than cosmetic change which did not help them conform to the spirit of the regulations. Those who do not want to hear, will feel the wrath of the Regulator. There must be no uncertainty about this.
Tranche 1 reforms are planned to take effect in the 2nd quarter of 2017, with appropriate transitional provisions where necessary. It is envisaged that the Regulations and PPRs will be promulgated / made before this date to afford legal certainty, and will in turn afford insurers sufficient time to prepare for implementation.
The actual presentation goes into a lot more detail on each of the aspects mentioned above. Click here to download a copy.