SAIA

South African Insurance Association

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Governance Risks Update

Retail Distribution Review

The Financial Services Board (FSB) advised the SAIA recently that the current legal amendments being drafted by the FSB would give effect to some of the proposals in the RDR Phase 1 Update.

The FSB’s technical discussions with the industry will continue to run parallel to the legislative drafting process. The FSB is currently drafting the Road Map for Phase 2 of the RDR.

The FSB is also continuing to consult with members of the FSB’s Binder Fee Task Team to provide an opportunity for the industry to motivate why the draft binder fee caps in the Retail Distribution Review 2014 document are either appropriate or inappropriate.

The initial draft proposal on the binder fee caps in the RDR is as follows:

  • Activity of enter into, vary or review: 2% 
  • Activity of determining the wording, determining the premiums of a policy, determining value of policy benefits: 2%  
  • Activity of claims settling between: 1 to 3%

In respect of the FSB’s proposed prohibition on commercial binders, the FSB requested feedback specifically on the commercial lines segmentation exercise undertaken by individual insurers in July 2016, who are also members of the Binder Fee Task Team.

The FSB stressed that whilst the binder fee caps are the current focus, members should not lose sight of the fact that the governance and sustainability of the intermediated model should be reflected by the caps.

Update on The Financial Sector Regulation Bill

On 21 July 2016, the National Treasury (NT) published a media statement on the Twin Peaks Bill, a response matrix to the issues raised during the Standing Committee on Finance (SCOF) public consultation process, as well as a revised draft of the FSR Bill on the National Treasury website: www.treasury.gov.za

The publication of the documents was intended to facilitate any further engagements on issues raised during the public hearings, prior to the SCOF resuming deliberations on the Bill in August 2016.

The proposed amendments in draft are yet to be considered by the SCOF for final decision on the changes to be effected, prior to the submission of the Bill to the National Assembly in Parliament.

A request was made to SAIA members to advise the SAIA of any comments and/ or concerns, if any, with the proposed amendments in order to facilitate further engagements, if necessary. The SAIA met with the NT on the 10th August to discuss our further comments on their response document.

There were no contentious comments received from members on the NT responses and in certain instances the required amendments have been made and/ or further clarification provided.

For more information contact Aatika Kaldine on Aatika@saia.co.za/ Easvarie Naidoo on Easvarie@saia.co.za