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LOA/SAIA Consumer Credit Insurance Enquiry

LOA represents the long-term insurance industry and promotes a better understanding of insurance. The enquiry focuses on commission compliance and other aspects affecting the value proposition of credit life insurance. Zimele standards aim to ensure fair charges, easy access, and decent terms for consumers.

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LOA/SAIA Consumer Credit Insurance Enquiry

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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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