The FSCA and Prudential Authority (jointly referred to as the Authorities) recently published Joint Communication 4 of 2020 which provides clarity on certain regulatory requirements applicable to funeral insurance policies.
The publication confirms the application of the maximum amounts prescribed as they relate to Funeral Class (Class 4) of insurance business. It also confirms the regulatory status of funeral policies that provide benefits that exceed the maximum benefit amounts prescribed and provides clarity on some related aspects of the regulatory requirements in the Policyholder Protection Rules (PPRs) applicable to funeral policies.
The Joint Communication comes as a result of the Authorities having received requests for clarity in respect of the perceived regulatory inconsistency in the application of the maximum prescribed amounts as these amounts relate to the Funeral Class of insurance business. More specifically, the concerns raised related to the application of the maximum prescribed amounts that result in different outcomes for traditional insurers in contrast to micro-insurers, which creates unlevel playing fields.
Some of the interpretational challenges discussed in the Joint Communication relate to the application of the maximum amounts prescribed for the Funeral Class of life insurance business applicable to traditional life insurers and micro-insurers, Funeral policies that provide benefits that exceed the maximum prescribed benefit amounts, Application of the maximum prescribed benefit limits to rider benefits, Annual Escalation of the prescribed limits, Interpretation of Rule 10.4.13 of the Long-term Insurance PPRs on the prohibition of the use of the term “funeral” in advertisements, Waiver of waiting periods, Burial Repatriation benefits, and the application of the product standards to existing business.