Article provided by King Price Insurance
Although you might not often think about financial sector regulation, there are hundreds of laws in force to protect you and your small business from upheaval and unscrupulous conduct. The Insurance Act No. 18 of 2017 sets out the licensing requirements, operating structures and prudential standards for insurers, insurance groups, micro-insurers and reinsurers, and compliance ensures that insurers are adequately capitalised to be able to pay all claims, and that the sector is sustainable over the long term.
Basically, it gives you, as a business owner, peace of mind that the insurer you’ve trusted with your business’ risks won’t go ‘belly up’.
The Policyholder Protection Rules (PPR) – while being very consumer-friendly – also impact on your business’ insurance advisor or broker. PPR demands that insurers ensure that brokers:
- Are ‘fit and proper’ – a regulated level of proficiency.
- Are trained and licensed to sell their products.
- Meet the Financial Advisory and Intermediary Services product knowledge competency requirements.
- Have detailed intermediary agreements in place.
There are also clear rules on the flow of insurance premium and commission between brokers, insurers and policyholders, with the aim of enhancing industry-wide professionalism and ensuring that customers are treated fairly.
Other pro-client practices resulting from the implementation of PPR include a directive to write insurance policy documents, and all other comms, in easy-to-understand English so that clients know exactly what they’re signing up for – there should be no fine print and no hiding behind confusing legalese. You can find a great example of a simple, user-friendly policy document by clicking here.
In addition, Treating Customers Fairly (TCF), is an outcomes-based regulatory and supervisory approach designed to ensure that financial institutions deliver specific, clearly set-out fairness outcomes. Regulated entities are expected to demonstrate that they deliver the following six TCF outcomes throughout their product life cycle, from product design and promotion; through advice and servicing; to complaints and claims handling:
- Customers can be confident they are dealing with firms where TCF is central to the corporate culture.
- Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly.
- Customers are provided with clear information and kept appropriately informed before, during and after point of sale.
- Where advice is given, it is suitable and takes account of customer circumstance.
- Products perform as firms have led customers to expect, and service is of an acceptable standard and as they have been led to expect.
- Customers do not face unreasonable post-sale barriers imposed by firms to change product, switch providers, submit a claim or make a complaint.