Long Term Insurance Update Anna Rosenberg September 2014

Demarcation Regulations Demarcating health insurance and medical scheme business has a long history:  LOA Code  Section 72 of the Long Term Insurance Act – introduced in the Insurance Laws Amendment Act of 2008  Task team set up by Treasury with representation from ASISA and SAIA  First draft of the demarcation regulations – March 2012  Second draft of the demarcation regulations – April 2014

 Welcome changes regarding Hospital Cash Plans but wording of Category 1 is unclear – have made suggestions.  Need for risk rating – max entry age, waiting periods and pre- existing exclusions.  Commission changes problematic and should be part of RDR.  Registrar can require changes to be made or product to be withdrawn at any time and on subjective grounds.  Transitional arrangements –retrospective application. Demarcation Regulations ASISA comments

Binder Regulations amendments  The regulations govern the way in which insurers outsource their binder functions.  Amendments are in response to emerging undesirable practices and regulatory gaps identified since the Regulations came into effect in January  Comments from ASISA on 2 aspects:  Definition of associate – extended definition is too wide  Prescribed fees – raised concern that prescribed fees could unduly interfere with economic activity and market mechanisms but will need to assess and comment when these are consulted on

FSB information letter on co- administration agreements  Deals with agreements between insurers and funeral parlours or funeral administrators.  Issued on 29 August draft circulated previously which ASISA commented on.  Contains regulatory and conduct of business concerns of the FSB.  Sets out the requirements regarding commission, binder fees, outsourcing and the basis for these

Report on Consumer Credit Insurance  Report issued by Treasury/FSB - comments are due by 30 September 2014  Is being dealt with by the Credit Life Standing Committee  Report is comprehensive and thorough  Key findings o Lack of transparency in the total costs of credit o High premiums and different pricing o Product differentiation limits comparison o CCI cover does not meet the needs of the target market  Key focus areas for comment: o Regulating the pricing of CCI o Regulating market conduct practices o Protecting consumers through insurance cover for credit providers

Thank you