From: FIA Communication [mailto:
Sent: 13 December 2016 14:46
To: JAMES <
Subject: Your chance to comment on the draft insurance regulations
DearJAMESVEAL,
FIA Member No:61344
FIA Branch:
Important: These regulations will impact your business
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Finance Minister Pravin Gordhan has published proposed amendments to the long term and short term insurance regulations for public comment.
These proposed amendments are necessary to give effect to a number of 'conduct of business reforms' undertaken and consulted on over the last few years, including the Insurance Bill, SAM and RDR.
The FIA needs your help - we have made two requests - to ensure that our submission to National Treasury reflects your views
First request - your comments:We request that all members read the documentation (links provided below) and submit your detailed feedback to the FIA by Tuesday, 31st of January 2017. We will combine all of your responses into a powerful FIA submission.
Documentation
1. Insurance regulation press statement
2. Annexure A - Proposed amendments to the Long Term Insurance Act
3. Annexure B - Proposed amendments to the Short Term Insurance Act
4. Annexure C - Explanatory document supporting consultation
NB: Separate submissions will be made for businesses falling under the Short Term and the Long Term Insurance Acts, so please ensure that your comments are made under each heading.
NB: We strongly recommend that you refer back to the affected sections / paragraphs in the original insurance regulations as you work through the proposed changes. This will reduce the risk of incorrect interpretations of the changes.
Please take careful note of changes to the requirements for binders. These changes have been made in support of the Retail Distriubution Review (RDR) and restrict who may enter into a binder agreement; what sort of activity may be outsourced; and very importantly, what remuneration may be paid in a binder agreement. In anticipation of this proposal, the FIA invited the FSB earlier this year to visit some of our larger members to demonstrate the efficiency and cost ratios of binder holders.
And that brings us to our second request for assistance
Second request - case studies:To fully motivate the merits of fair and equitable remuneration in the binder / outsource space the FIA will have to demonstrate to both the FSB and National Treasury how fees are calculated for each of the services provided as well as how these fees are offset by the actual costs. We are therefore calling on FIA members involved in binder / outsource arrangements to assist the FIA as follows:
1) Please provide us with case studies of your binder / outsource activities (per activity) that clearly show the fees earned versus the costs incurred. These case studies will be treated with utmost good faith and in confidence. (The more validated test cases we have, the stronger our submission to the FSB will be).
2) In addition to the above case studies could you please make reference to the impact on your business should the fee earned from binder / outsource activities be reduced. You should make specific reference to the impact on employment / future employment levels at your FSP. (You can contact Peter Atkinson directly should you require a guideline on how this calculation should be done).
3) Please ensure that the data submitted in point 1 and 2 above is validated as far as possible. We cannot submit 'guess work' to the regulators.
Please submit all test cases and accompanying comment by email to Peter Atkinson at . He will collate the information without any reference to your FSP.
FIA National Office response
The FIA National Office has already started with an in-depth review of the proposed changes to the insurance regulations following which we will consult widely with our members, the regulators and legal counsel before making our submission.
We trust that you will find the time over the holiday period (and if not then early in 2017) to give the above proposals the necessary attention. We look forward to reviewing and collating your views and case studies in the New Year.
FIA Regards,
Peter Atkinson – National Technical Portfolio Manager.
Tel: 011 694 3100; Fax: 011 726 7508; Mobile: 083 627 5026
E-mail: ; Web:
Distributed by
Gareth Stokes – Communications Manager.
Tel: 012 665 0085; Fax: 012 665 0534; Mobile: 073 373 3580
E-mail: ; Web:
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The Small Print
PS: Please distribute this communication as appropriate within your company.
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