PRESENTATION TO: THE PORTFOLIO COMMITTEE ON FINANCE PRESENTED BY : DEON VAN STADEN

DEFINITIONS LT(Clause 2) ST (Clause 26(b)) Managing Executive Reason – Fit and Proper Current definition not clear – Interpreted differently Amendment necessary to make it clear Chief Executive Officer –Managing Executive Senior Managers

MISLEADING ADVERTISING MATERIAL LT(Clause 3)S4 ST (Clause 27)S4 Section deals with powers of Registrar to direct persons to change or amend advertising material. This section is expanded to ensure that advertising material that relates to an insurance policy includes the name of the insurer that underwrites the policy. Afford public to verify contents Prevent unregistered insurance business Was in old insurance Act

NAME OF INSURER LT(Clause 4)S8 ST(Clause 27) S8 Registrar must approve name of insurer and changes to name. Amendment is to also approve -Translation -Shortened form or -Derivative (acceptable, records, closely related)

REINSURANCE LT(Clause 6)S15A ST(Clause 29)S15A - Composite reinsurers only reinsurance business - Amendment to do business directly with a fund - A fund is - Friendly Society - Pension Fund - Medical Scheme - Other approved by Registrar

Notification of certain appointments, terminations and registrations LT(Clause 7)S18 ST (Clause31)S18 Currently insurers must inform Registrar of - Appointment; and - Terminations of directors and Managing Executive together with reasons for appointment or termination

Clause 7 cont. -Amendment to also require above if directors, Managing Executive resign. Currently this section only requires reason for termination, resignation to be given by insurer. The amendment will further give the registrar the option to request reasons from the director or Managing Executive if the Registrar so wish.

DIFFERENT CLASSES OF ORDINARY SHARES LT(Clause 8 )s24 ST (Clause 32)s23 Registrar must give approval This is to regulate insurers who conduct their business on a cell basis The objective of cell business is to differentiate between profits to different shareholders, which is achieved through the issuing of different classes of shares

LT(Clause 16) S39 Rectifies a textual error

FREE CHOICE IN CERTAIN CIRCUMSTANCES LT (Clause 17)S44 Banks/Money lenders – security -insurance policy Free choice of insurer Short-term insurer – no free choice (mortgage) Long-term insurers lend money to policyholders on the security of the value of the policy

CASH PREMIUMS LT(Clause 18)S47 LT Only Long-term Insurance Act – Receipt if premium is paid in cash containing name of insurer Banks cannot comply and is continuously breaching the Act Purpose was to protect against brokers Banking system enough protection

MATERIALITY OF MISREPRESENTATION LT(Clause 19)S59 ST (Clause36)S53 wrong disclosure Repudiation of claims no disclosure reasonable insurer(court) (objective test) Materiality test insurer in question (subjective test)

IN DUPLUM- RULE LT(Clause 20)S61 Unpaid interest on a capital amount due, only accumulates up to an amount equal to the capital. (Common law principle) Should not apply to policy loans as it will have a negative effect on other policyholders For the above reason the in duplum rule was overruled by the now repealed Insurance Act, 1943 in The amendment is to restore the position as it was up to 31 December 1998

DEFINITIONS (Clause 26) “Lloyd’s underwriter” – means an underwriter or non-underwriting member of Lloyd’s “Managing executive” as explained “Representative” – means a natural person employed

(Clause 27) Same as Long-term – Already explained Advertising Material

“FUNERAL POLICIES ST(Clause 28)S8 This amendment is to make sure that Short- term insurers do not sell funeral or burial policies because it is long-term insurance business

Clause 29 – Reinsurance (same as with long-term insurance Clause 30 – Name (same as with long-term insurance) Clause 31 – Notification of certain appointments termination and resignations (same as with long-term insurance)

(Clause 32b) As explained – different classes of ordinary shares

ST(Clause 35)S47 Free copy of insurance policy To be the same as the long-term Insurance Act

(CLAUSE 36)S53 As explained – clause 19 of LT Materiality of Misrepresentation

ST(Clause 39)Schedule 3 39(a)Rectifies textual error 39(a)That transitional provisions will cease to apply in the event of either the one or the other occurrence – not both.