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FIA ADVISORY COUNCIL MEETING SHORT TERM EXCO FEEDBACK

FIA ADVISORY COUNCIL MEETING SHORT TERM EXCO FEEDBACK. 22 October 2009. FORMAT. Barry Taylor Regulatory Issues Nan McLennan Corporate, Commercial and Personal Lines Committee Arnold vd Linde Insurer Data Connectivity/ Acord Initiative. Insurance Laws Amendment Act (Sec 48). Summary

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FIA ADVISORY COUNCIL MEETING SHORT TERM EXCO FEEDBACK

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  1. FIA ADVISORY COUNCIL MEETING SHORT TERM EXCO FEEDBACK 22 October 2009

  2. FORMAT Barry Taylor Regulatory Issues Nan McLennan Corporate, Commercial and Personal Lines Committee Arnold vd Linde Insurer Data Connectivity/Acord Initiative

  3. Insurance Laws Amendment Act (Sec 48) • Summary • To determine who a “Binder Holder/Mandated” • broker should be and to regulate the behaviour, disciplines, • governance and remuneration of those entities. • Key Issues: (to intermediary who has insurer mandates) • What and Who is, and should be entitled to be a binder holder vs intermediary who is able to “hold covered”. The key “enter into” • Potential conflict of interest, disclosure and basis of remuneration. • Terms and detail of the binder agreement. • The principle that the insurer OWNS the data and is therefore accountable for fulfillment – need for the transfer of data.

  4. Insurance Laws Amendment Act (Sec 48)(continued) Key Issues: (to intermediary who has insurer mandates) Aim of SAIA/SAUMA/FIA workgroup “self regulation instead of “prohibition” Timings - next FSB workgroup: 18th November 2009 – draft regulations for the workgroup’s debate and comments expected followed by Industry consultation Common thread to FAIS conflict of interest amendment act and Industry Data Connectivity

  5. FAIS conflict of interest and prohibitions of non cash incentives amendment • We have not been privy to these discussions – have given comments via SAIA • ILAA workgroup to be included in future discussions on conflict of interest • amendment • Recommending to FSB that FAIS cannot regulate on the ”commercial” aspects • of business, i.e. remuneration, ownership which should be part of STIA.

  6. Financial Soundness of Intermediaries – FAIS Fit and Proper notice 106 of 2008 • Representation made to the FSB – unsuccessful and requirement of Act applies to all Short Term Intermediaries who collect premiums obo Insurers. • (Assets sufficient to meet liabilities and maintenance of liquid assets equal to or greater than 4/52 weeks of annual expenditure)

  7. Treating Customers Fairly • Discussions have commenced at FSB re this (following on UK FSA legislation) (can be aligned to FAIS & Consumer Protection Act) • Purpose – to address “poor” image of financial services in eyes of consumer. • Emphasis is on changing the behaviour / culture towards customers, viz; • Fair treatment of customers is central • Products & Services marketed/sold to meet needs • Clear information provided prior, during and post sale process • Advice is appropriate • Products perform as stated and expected • No Unreasonable post sale barriers

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