Businesses cannot avoid insurance regulation merely by describing risk-transfer arrangements as contractual benefits, protection mechanisms, or extensions of common law liability, according to a commentary by Eben Smit, a director, and Phetha Mchunu, an associate, in Cliffe Dekker Hofmeyr’s Corporate & Commercial practice on a recent Financial Services Tribunal decision.
The authors say the decision is significant for insurers, intermediaries, and non-financial services businesses that offer customers protection, indemnity cover, or other risk-transfer mechanisms as part of broader commercial arrangements.
Their commentary follows the Tribunal’s 9 July dismissal of Kyle Barry Tiltman’s application for reconsideration of the Financial Sector Conduct Authority’s decision, issued on 8 December 2025, to impose a joint-and-several administrative penalty of R12 559 192 and debar him for 15 years.
The sanctions arose from an FSCA investigation into the activities of The Relocations Group (Pty) Ltd and its predecessor, South African Relocations (Pty) Ltd. The regulator found that the companies had conducted unauthorised insurance business by providing customers with “all-risk” cover as part of relocation services.
Read: R12.6m fine, 15-year ban send strong warning on unauthorised insurance
According to the Tribunal’s summary of the case, the investigation found that more than 16 000 policies had been issued, with aggregate premiums exceeding R12.5 million. The FSCA also found that Tiltman had interfered with or hindered the investigation.
According to the commentary, Tiltman did not initially challenge the FSCA’s findings when responding to the regulator’s Notice of Intended Administrative Sanction. He instead proposed that the penalty be reduced to R250 000 and the debarment shortened to less than three years.
In his reconsideration application, however, he sought to have both the penalty and the debarment set aside entirely, arguing that the relocation business operated as a bailee for reward and that the “all-risk” cover amounted to a contractual extension of common law liability rather than insurance business.
Tribunal’s findings
Smit and Mchunu say the case raised a familiar question in insurance regulation: whether a commercial arrangement that purports to extend liability or provide contractual protection has, in substance, crossed the line into regulated insurance business.
The Tribunal rejected Tiltman’s characterisation of the arrangement, finding that his explanation was unsustainable on the facts. It concluded that the conduct bore the essential characteristics of insurance, identifying four key features: the payment of a premium or an arrangement for the payment of a premium, an undertaking to meet an insurance obligation, the indemnification of loss, and the occurrence of an uncertain risk.
According to CDH, the decision reflects the long-established principle that the legal characterisation of an arrangement depends on its substantive operation rather than the labels adopted by the parties. Simply describing a product as a contractual benefit, protection mechanism, or extension of liability will not prevent it from being regarded as insurance if its essential features indicate otherwise.
The commentary also notes that the Tribunal upheld the FSCA’s approach to both the debarment and the administrative penalty. It confirmed that the regulator is empowered to debar individuals who materially contravene financial sector laws and reiterated that it would interfere with the regulator’s determination of an appropriate debarment period only in limited circumstances, such as bias, arbitrary or capricious conduct, the exercise of discretion on an incorrect principle, or other substantial grounds. Finding none of those circumstances to be present, the Tribunal upheld the 15-year debarment.
The authors say the Tribunal adopted a similar approach to the administrative penalty, regarding the determination of an appropriate sanction as largely a matter for the regulator’s discretion. They note that the Tribunal observed that Tiltman had acted wilfully in an obstructive manner and had raised “spurious defences” after initially not contesting the FSCA’s findings. It also rejected the argument that his potential insolvency justified interference with the penalty.
Implications for businesses
Turning to the broader significance of the ruling, Smit and Mchunu say the decision serves as a timely reminder that a commercial arrangement may amount to insurance business where, in return for a premium or an arrangement for the payment of a premium, a person undertakes an insurance obligation that becomes enforceable on the occurrence of an uncertain event.
They say businesses offering customers any form of cover, protection plan, indemnity undertaking, replacement guarantee, or other risk-transfer mechanism should carefully consider whether such arrangements fall within the regulatory framework governing insurance business.
The authors add that the case is particularly relevant at a time when many non-insurance businesses seek to enhance their value proposition by offering customers additional protection products alongside their core services. The fact that such arrangements are embedded in a broader commercial transaction does not necessarily remove them from the scope of insurance regulation, they say, because the substance of the arrangement remains the decisive consideration.
Smit and Mchunu conclude that the decision reinforces a fundamental principle of South African insurance law: where an arrangement contains the hallmarks of insurance, it will be treated as insurance regardless of the terminology adopted by the parties.
They add that businesses seeking to offer customers protection against uncertain future losses should carefully assess whether regulatory authorisation is required before launching such products, warning that the consequences of getting that assessment wrong can be severe.
