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LOA / SAIA Consumer Credit Insurance Enquiry 9 May 2008 PCOF briefing

LOA / SAIA Consumer Credit Insurance Enquiry 9 May 2008 PCOF briefing. Role of LOA. LOA established 1935, fulfils role of industry representative and self-regulatory body for long-term insurance industry Promotes the interests of the industry and the insured public by:

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LOA / SAIA Consumer Credit Insurance Enquiry 9 May 2008 PCOF briefing

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  1. LOA / SAIA Consumer Credit Insurance Enquiry 9 May 2008 PCOF briefing LOA/SAIA Consumer Credit Insurance Enquiry

  2. Role of LOA • LOA established 1935, fulfils role of industry representative and self-regulatory body for long-term insurance industry • Promotes the interests of the industry and the insured public by: • promoting a better understanding of long-term insurance among the people of the country • Representing the industry and its policyholders in negotiations with authorities • Practising self-regulation “Forum where member offices can interact to promote their interests and those of future stakeholders.” LOA/SAIA Consumer Credit Insurance Enquiry

  3. LOA members • Nedgroup Life Assurance Company Ltd • Nestlife Assurance Corporation Ltd • New Era Life Insurance Co Ltd • Old Mutual Life Assurance Co (SA) Ltd • OUTsurance Life Insurance Company Ltd • Pinnafrica Life Ltd • Prosperity Insurance Co Ltd • Professional Provident Society Insurance Company Ltd (PPS) • Real People Insurance Company Ltd • Regent Life Assurance Co Ltd • Rentmeester Assurance Ltd • RGA Reinsurance Co of SA Ltd • Safrican Insurance Co Ltd • Sage Life Ltd • Sanlam Life Insurance Ltd • Swiss Re Life & Health Southern Africa Ltd • ABSA Life Ltd • African Life Assurance Company Ltd • Alexander Forbes Life Ltd • Assupol Life • AVBOB Mutual Assurance Society • Capital Alliance Life Ltd • Channel Life Ltd • Clientele Life Assurance Co Ltd • Constantia Life and Health Assurance Co Ltd • Discovery Life Ltd • Gen Re • Hannover Life Reassurance African Ltd • Hollard Life Assurance Company Ltd • HTG Life Ltd • Liberty Life • Liberty Active Ltd • Lion of Africa Insurance Company Ltd • Medscheme Life • Metropolitan Life Ltd • Momentum Group Ltd • Munich Reinsurance Co of Africa Ltd LOA/SAIA Consumer Credit Insurance Enquiry

  4. LOA Code of Conduct • Chapter 1 Code on the Life Register • Chapter 2 Code on Demarcation: Health Insurance & Medical Schemes • Chapter 3 Code of Good Practice for Disability Insurance • Chapter 4 Code on Medical Requirements, Medical Report forms and related matters • Chapter 5 Code on dread disease benefits • Chapter 6 HIV Testing protocol • Chapter 7 Code on Replacement • Chapter 8 Code on S Reference system • Chapter 9 Code of Good Practice on Complaints Resolution • Chapter 10 Code on Equality • Chapter 11 Code on Half-yearly Statistics • Chapter 12 Code on Commission Control & interpretation of the Remuneration Regs • Chapter 13 Code on Public Relations and on Advertising and Promotion • Chapter 14 Code on Policy Quotations • Chapter 15 Code on Deferred Compensation • Chapter 16 Code on Short Term Investment Products • Chapter 17 Code on Claims Register • Chapter 18 Code on Intermediary Register • Chapter 19 Code on Assistance Business • Chapter 20 Code on Genetic Testing • Chapter 21 Code on Living Annuities • Chapter 22 Code on Unclaimed Benefits LOA/SAIA Consumer Credit Insurance Enquiry

  5. LOA/SAIA Consumer Credit Insurance Enquiry

  6. LOA/SAIA Consumer Credit Insurance Enquiry

  7. What gave rise to this enquiry? • Persistent rumours about commission non-compliance, no facts or formal complaints • Highlighted in Personal Finance article • LOA already concerned about aspects that may impact on value proposition, and steps taken to address aspects such as HIV exclusion clauses • Initiated setting up of Panel of Enquiry & invited SAIA to join • Mandate broader than just commission: anything that may impact negatively on the value proposition • Hearings in October 2007, report finalised 2 weeks ago • Recommends wider application of Zimele standards LOA/SAIA Consumer Credit Insurance Enquiry

  8. Zimele standards • Zimele standards: interprets the FSC “access” definition for life insurers • Standards approved for funeral cover, life cover, physical impairment cover & also credit life cover • Methodology based on fair Charges, easy Access and decent Terms (CAT) • Credit life standards (Zimele folder) include: • Price caps: max monthly premium rates • Policy summaries available in dominant language • No HIV/AIDS exclusions applied at claims stage • Same rate applies to all policyholders of the same age at entry • Where exclusions are applied, standard wording • Physical access: inception & claims LOA/SAIA Consumer Credit Insurance Enquiry

  9. LOA/SAIA Consumer Credit Insurance Enquiry

  10. Way forward – LOA • LOA Credit Life Committee working with SAIA and others: initial recommendations to LOA board 29 May 2008 – firm proposals by 3rd quarter 2008 • Workshop with FinMark Trust – experts in this field • Some provisional recommendations: • Regular communication by the insurance company or credit provider to the client to increase awareness of cover (minimum standards?) • Use of pre-existing conditions- medical questions at application stage should be defined into more specific disease related questions thereby removing all potential misunderstandings • Extend the claim notification period- this will assist beneficiaries who only become aware of the policy at a later stage LOA/SAIA Consumer Credit Insurance Enquiry

  11. Role of trade associations • Self-regulation can work very well (e.g.Zimele) but trade associations much less effectiveness on competitive issues such as commission • Also difficulties with sanctioning members & Competition Act • Self-regulation should not play a major role regarding commission/incentives to intermediaries • Consumer education major focus: lack of awareness of cover the major concern LOA/SAIA Consumer Credit Insurance Enquiry

  12. LOA consumer education • Since 2001 - 1/5 of annual subscription fees (HIV/AIDS in partnership with AIDS Law Project, assistance business, credit life & more) • Mongi Mali – “save money” • Government employees – R2.6 million (2006/2007) • FSC Consumer Education (FSC: 0.2% of post-tax operating profits) • 2006: R 1,3-million • 2007: R10-million • Trade associations play important role: credible source of information, co-authors of FSC consumer education standards • Consumer education is key in this area: vulnerable consumers • Need more focused programs (with SAIA) LOA/SAIA Consumer Credit Insurance Enquiry

  13. Thank you LOA/SAIA Consumer Credit Insurance Enquiry

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