PRESENTATION TO: THE PORTFOLIO COMMITTEE ON FINANCE

1
PRESENTATION TO THE PORTFOLIO COMMITTEE ON
FINANCE

• PRESENTED BY DEON VAN STADEN

2
DEFINITIONS LT(Clause 2)
ST (Clause 26(b))

• Managing Executive
• Reason Fit and Proper
• Current definition not clear Interpreted
  differently
• Amendment necessary to make it clear
• Chief Executive Officer
• Managing Executive
• Senior Managers

3
MISLEADING ADVERTISING MATERIAL LT(Clause 3)S4
ST (Clause 27)S4

• Section deals with powers of Registrar to direct
  persons to change or amend advertising material.
• This section is expanded to ensure that
  advertising material that relates to an insurance
  policy includes the name of the insurer that
  underwrites the policy.

• Afford public to verify contents
• Prevent unregistered insurance business
• Was in old insurance Act

4
NAME OF INSURER LT(Clause 4)S8
ST(Clause 27) S8

• Registrar must approve name of insurer and
  changes to name.
• Amendment is to also approve
• Translation
• Shortened form or
• Derivative
• (acceptable, records, closely related)

5
REINSURANCE LT(Clause 6)S15A
ST(Clause
29)S15A

• - Composite reinsurers only reinsurance business
• - Amendment to do business directly with a fund
• - A fund is - Friendly Society
• - Pension Fund
• - Medical Scheme
• - Other approved by Registrar

6
Notification of certain appointments,
terminations and registrations LT(Clause
7)S18 ST (Clause31)S18

• Currently insurers must inform Registrar of
• - Appointment and
• - Terminations of directors and Managing
  Executive together with reasons for appointment
  or termination

7
Clause 7 cont.

• Amendment to also require above if directors,
  Managing Executive resign.
• Currently this section only requires reason for
  termination, resignation to be given by insurer.
• The amendment will further give the registrar
  the option to request reasons from the director
  or Managing Executive if the Registrar so wish.

8
DIFFERENT CLASSES OF ORDINARY SHARES LT(Clause
8 )s24 ST (Clause 32)s23

• Registrar must give approval
• This is to regulate insurers who conduct their
  business on a cell basis
• The objective of cell business is to
  differentiate between profits to different
  shareholders, which is achieved through the
  issuing of different classes of shares

9
LT(Clause 16) S39

• Rectifies a textual error

10
FREE CHOICE IN CERTAIN CIRCUMSTANCES LT(Clause
17)S44

• Banks/Money lenders security -insurance policy
• Free choice of insurer
• Short-term insurer no free choice (mortgage)
• Long-term insurers lend money to policyholders on
  the security of the value of the policy

11
CASH PREMIUMS LT(Clause 18)S47 LT Only

• Long-term Insurance Act Receipt if premium is
  paid in cash containing name of insurer
• Banks cannot comply and is continuously breaching
  the Act
• Purpose was to protect against brokers
• Banking system enough protection

12
MATERIALITY OF MISREPRESENTATION LT(Clause
19)S59 ST (Clause36)S53

• wrong disclosure
• Repudiation of claims
• no disclosure
• reasonable insurer(court) (objective
  test)
• Materiality test
• insurer in question
  (subjective test)

13
IN DUPLUM- RULE LT(Clause 20)S61

• Unpaid interest on a capital amount due, only
  accumulates up to an amount equal to the capital.
  (Common law principle)
• Should not apply to policy loans as it will have
  a negative effect on other policyholders
• For the above reason the in duplum rule was
  overruled by the now repealed Insurance Act, 1943
  in 1999.
• The amendment is to restore the position as it
  was up to 31 December 1998

14
DEFINITIONS (Clause 26)

• Lloyds underwriter means an underwriter or
  non-underwriting member of Lloyds
• Managing executive as explained
• Representative means a natural person employed

15
(Clause 27)

• Same as Long-term Already explained
• Advertising Material

16
FUNERAL POLICIES ST(Clause 28)S8

• This amendment is to make sure that Short-term
  insurers do not sell funeral or burial policies
  because it is long-term insurance business

17

• Clause 29 Reinsurance (same as with long-term
  insurance
• Clause 30 Name (same as with long-term
  insurance)
• Clause 31 Notification of certain appointments
  termination and resignations (same as with
  long-term insurance)

18
(Clause 32b)

• As explained different classes of ordinary
  shares

19
ST(Clause 35)S47

• Free copy of insurance policy
• To be the same as the long-term Insurance Act

20
(CLAUSE 36)S53

• As explained clause 19 of LT
• Materiality of Misrepresentation

21
ST(Clause 39)Schedule 3

• 39(a) Rectifies textual error
• 39(a) That transitional provisions will cease to
  apply in the event of either the one or the other
  occurrence not both.