The Insurance Laws Amendment Bill was published on 24 June 2013 and seeks to amend both the Long-Term Insurance Act and the Short-Term Insurance Act. The Bill relates largely to the powers of the Registrar, the licencing provisions in respect of insurers, governance and risk management requirements and to provide for the supervision of insurance groups; and clarity in respect of certain market conduct matters.
The object of the Amendment Bill is to promote the maintenance of a fair, safe and stable long-term and short-term insurance market for the benefit and protection of all policyholders concerned.
The Bill proposes that both the Long-Term Insurance Act and the Short-Term Insurance Act be amended to extend the powers of the respective registrars to exempt certain parties from being subjected to the strict application of either the Short-Term Insurance Act or the Long-Term Insurance Act respectively.
The registrar is entitled to provide interpretation guidelines in this regard as to how these powers will be utilised.
The Bill also seeks to be amended to more broadly define the business of a long-term and short-term insurer and now includes any business whose primary business is the conducting of either long-term insurance or short-term insurance, as the case may be.
The definition of "Company" as set out in section 1 of the Companies Act No 71 of 2008 has also been included in the Bill. In order to be registered as either a long-term or short-term insurer, the Bill proposes that the registrar must be satisfied that the applicant must be satisfied that the directors and senior management are fit and proper and not only have complied, but will be able to comply with the requirements of the Long-Term Insurance Act and the Short-Term insurance Act, respectively.
Furthermore, the Bill proposes that the registration of either a long-term insurer or a short-term insurer cannot be concluded if such registration will be contrary to the interests of the public and policyholders.
The Bill also contemplates, in section 10 of both the LongTerm Insurance Act and ShortTerm Insurance Act , to extend the registrar's power, by notice to the respective insurer, to amend, delete, replace or impose additional conditions as contemplated in section 10 to which the long term insurer is registered or deemed to be registered.
The Bill proposes completely amending the governance framework of both short-term and long-term insurers which amendments can be seen at sections 14(a) to 14(1) in the Bill.
Essentially, many of the requirements that the Companies Act will impose on a company have been mirrored or enhanced as applies to short-term and long-term insurers. This increased governance requirement will be for the benefit of the entire insurance industry, especially policyholders.
The Bill contemplates that notification of certain appointments, terminations and resignations of any person "in senior management or head of control function" must be reported. Again, this is aimed at improving the governance of insurers and allowing the relevant authorities to be able to keep any eye on the relevant insurers, as it were.
The Bill specifically contemplates extending the definition of "control", as defined in section 2.2 of the Companies Act, to a short-term insurer who is under the Control of another. This provision is mirrored at section 26 of the Long-Term Insurance Act The shareholding required to exercise control has been decreased from 25% to 15%.
The Bill also goes on to include at section 55(a) to 55(o) of the Short-Term Insurance Act and Part 65(a) to 65(o) of the Long-Term Insurance Act. These sections set out the requirements imposed on directors, senior management and heads of departments in Insurance Groups. It also goes on to include various financial aspects required of insurance groups, as well as the general powers and functions of the registrar as concerns Insurance Groups.
Offences under the Act have now also been widened to include offences by an Insurance Group.
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