In December 2018 the FSCA published FSCA Communication 2 of 2018: Update on the future of the premium collection regulatory framework under the Short- and Long-term Insurance Acts. This communication highlighted the various regulatory interventions being considered to address specific risks inherent in third party premium collection business models. The communication also confirmed that further industry engagements would be held during early 2019 to help inform the FSCA’s policy position on the future of the premium collection regulatory framework. Based on these engagements the FSCA has formulated a number of proposals to address specific risks identified. Consequently the FSCA published a Position Paper earlier this month detailing the proposals on the future regulatory framework for the collection of insurance premiums.
Briefly, the Position Paper:
- Confirms the FSCA’s current thinking on a future regulatory model for the collection of insurance premiums in South Africa within the context of key regulatory and industry developments to date.
- Highlights the FSCA’s recent supervisory experiences in respect of current premium collection practices in the industry.
- Puts forward several regulatory proposals to address key risks inherent in third party premium collection models and to ensure that the regulatory framework keeps pace with the evolving third-party payments landscape. These regulatory proposals include:
– identification and classification of premium collection related activities and the determination of appropriate remuneration for such activities;
– criteria for qualifying intermediaries who wish to collect premiums on behalf of insurers;
– treatment of premiums as trust monies;
– reduction in the allowable period for the remittance of premiums by third parties; and
– interim remuneration arrangements for intermediaries who perform premium collection related activities in direct collection models.
Interested parties are invited to submit written comments on the proposals by 10 May 2019 to the following email address FSCA.RFDPremiumCollectionPaper@fsca.co.za.
Click here to download FSCA Communication 3 of 2019 which provides a high level overview of the Position Paper and invites interested parties to submit written comments on the proposals contained in the Position Paper.