COVID-19: EXEMPTIONS FOR SHORT-TERM INSURERS PROVIDING PREMIUM RELIEF, SOUTH AFRICA
On 24 April 2020, the Financial Sector Conduct Authority (FSCA) published FSCA INS Notice 8 of 2020 (Notice). This Notice provides exemptions for short-term insurers from certain provisions of the Regulations under the Short-term Insurance Act, 1998 (STIA Regulations).
The FSCA exempted certain short-term insurers and independent intermediaries from Regulation 5.2 and Regulation 5.3(1) under the STIA Regulations in respect of policies that are subject to premium relief.
Regulation 5.2 stipulates that commission shall not be paid or accepted before the date on which the premium in respect of which it is payable has been paid to the insurer. Regulation 5.3(1) stipulates that subject to Regulation 5.2, no commission shall exceed the maximum allowable amount.
The exemptions aim to facilitate the delivery of premium relief to policyholders, at the discretion of the insurer, without affecting the expected income of intermediaries. The exemption is subject to the following conditions:
- the premium relief is granted in relation to an existing policy of which the policyholder is in good standing with the insurer;
- any commission paid in respect of a policy that is subject to premium relief does not exceed the maximum allowable commission prescribed in Regulation 5.3(1), whereas a reference to ‘premium’ in Regulation 5.3(1) must be read as the premium that would have been payable had it not been for the premium relief.
FSCA INS Notice 8 of 2020 is available here. It replaces the previous FSCA INS Notice 6 of 2020, which has been withdrawn.