POLICYHOLDER PROTECTION RULES

(TRANCHE 1 AND 2)

WITHIN GUARDRISK (LIFE & NON-LIFE)

SADE GOVENDER COMPLIANCE MANAGER

DATE : 28 NOVEMBER 2018

SLIDE NO: 2

INDEX

OVERVIEW

FOUNDATION OF POLICYHOLDER PROTECTION RULES (PPRS) APPLICATION OF THE POLICYHOLDER PROTECTION RULES

REFLECTION AT GUARDRISK

NEXT STEPS

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OVERVIEW OF TRANCHE 1 & TRANCHE 2 RULES

OVERVIEW: “ THE BIGGER PICTURE”

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Tranche 1 amendments to PPRS and Regulations 01 January

2018

Financial Sector Regulation Act 01 April 2018

Insurance Act

01 July 2018

Further changes to STIA and

LTIA

Tranche 2 amendments to PPRs and Regulations 01 October

2018

Conduct of Financial

Institutions Act 2019

Memorandum of Understanding between Authorities (PA and FSCA)

REGULATORY STRATEGY OF THE FINANCIAL SECTOR CONDUCT AUTHORITY Key Objectives • Encouraging transformation • Building a robust regulatory framework that promotes fair customer treatment • Creating informed financial customers • Strengthening efficiency and financial market integrity • Encouraging FinTech

FOUNDATION OF PPRS

SOURCES OF CONDUCT RISK MITIGATION OF CONDUCT RISK

Poor culture & governance TCF Outcome 1: Culture & governance

Unfair contract terms TCF Outcome 2: Appropriate advertising, product value and distribution channels Misleading advertising

Ineffective disclosure TCF Outcome 3: Disclosure and clear information

Conflicted advice TCF Outcome 4: Appropriate advice

Poor product value TCF Outcome 5: Product performance

Poor claims handling TCF Outcome 6: Appropriate post sale services

Poor complaints handling

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APPLICATION OF PPRS

Responsibility of rules apply to Insurer including outsourced partners and representatives.

Applicable to: Exclusions: PPR’s do not apply to re-insurance policies or Non-life policies where the policyholder is a legal entity who’s asset value or turnover exceeds the threshold value determined by the Minister of the DTI in terms of the CPA, currently R2 000 000. General Principle: PPRs apply to all new and existing policies EXCEPT where otherwise indicated in a rule (transition allowed in Chapter 8)

Policyholder

Potential Policyholder

Member

Potential member

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Clarification of how the insurer must comply with TCF principles. Application

to members of Group Schemes

Applicable to any new product or any

change in design of an existing product. Specific requirement with regards to

“white labelling” arrangements

Assist the policyholder/member to comply with the demands of the credit

provider and NCA regulations

Prohibits charging any fee in addition to

premium. Premium or excesses (ST) must reasonably balance interest of insurer

and expectation of policyholder

Insurer responsibility to ensure intermediary meets FAIS product

knowledge competency requirements.

RULE: 1 (LT & ST)

Requirements For The Fair Treatment Of Policyholders

(Non-group schemes)

OVERVIEW TRANCHE 1 & 2 REQUIREMENTS

RULE: 2 (LT & ST)

Product Design

RULE: 3 (LT & ST)

Credit Life Insurance

RULE: 5 (LT & ST)

Negative Option Selection Of Policy Terms Or Conditions

RULE: 6 (LT & ST)

Determining Premiums (Excess determination only applicable to ST )

RULE: 7 (LT & ST)

Void Provisions

RULE: 9 (LT & ST)

Signing Of Blank Or Uncompleted Forms

Effective date of compliance is 1 January 2018:

RULE: 12 (LT & ST)

Arrangements with Intermediaries (excluding 12.2.1/2 & 12.4)

RULE: 8 (LT & ST)

Waiver Of Rights

RULE: 15 (ST)

Period of grace

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May only be reviewed if provided for in policy and prohibits certain reasons

reviews

Requires insurers to continually monitor product performance and whether the

distribution channel remain appropriate.

Advertisements produced by third parties must be factually correct,

balanced and not misleading Public interest

RULE: 6 (LT & ST)

Determining Premiums (Rule 6.2-6.4)

OVERVIEW TRANCHE 1 & 2 REQUIREMENTS

RULE: 10 (LT & ST)

Advertising

RULE: 14 (LT & ST) On-going Review Of Product Line

Performance

RULE: 15 (LT Only)

Premium Reviews

Effective date of compliance is 1 July 2018:

RULE: 6 (LT & ST)

Determining Premiums (Rule 6.2-6.4)

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Applies to Micro Insurers and traditional insurers who offer funeral policies.

More relaxed requirements. Maximum limits on sums insured.

RULE: 2A (LT & ST)

Microinsurance and Funeral Standards

OVERVIEW TRANCHE 1 & 2 REQUIREMENTS

RULE: 11 (LT & ST)

Disclosure after inception (copy and dispatch of policy)

RULE: 15A (LT) Payment of premiums

RULE: 21 (LT)

Misrepresentation

Effective date of compliance is 1 October 2018:

Section 15A and 21 were previously in

the LTIA (s52 and s59) and was repealed by the Insurance Act

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Intermediary agreement must be entered into directly between insurer and

intermediary

Claims management framework - establishment and requirements .

Allocation of responsibilities within insurer and outsourced partners

mandated to manage claims

Requirements for complaints management framework

Allocation of responsibilities Complaints escalation and review

process

RULE: 1 (LT & ST) Requirements For The Fair Treatment Of Policyholders

(Group schemes)

OVERVIEW TRANCHE 1 & 2 REQUIREMENTS

RULE: 4 (LT & ST)

Cooling off rights

RULE: 12 Arrangements with Intermediaries

(12.2.1/2 and 12.4)

RULE: 16 (LT & ST)

Recordkeeping

RULE: 17

Claims Management (Non Group Schemes )

RULE: 18

Complaints Management (Non Group Schemes )

Effective date of compliance is 1 January 2019:

RULE: 19 (LT)

Replacements of policies

RULE: 1 (LT & ST) Requirements For The Fair Treatment Of Policyholders

(Group schemes)

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RULE: 17

Claims Management (Group Schemes)

OVERVIEW TRANCHE 1 & 2 REQUIREMENTS

RULE: 18

Complaints Management (Group Schemes )

Effective date of compliance is 1 July 2019:

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Access to up-to-date, accurate, reliable, secure and complete as and when required .Properly identify, assess,

measure and manage risks

RULE: 13 (LT & ST)

Data Management

OVERVIEW TRANCHE 1 & 2 REQUIREMENTS

RULE: 19/20 (LT & ST)

Termination of policies

Effective date of compliance is 1 January 2020:

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REFLECTION AT GUARDRISK

Guardrisk strives to demonstrate proactive management of conduct risks.

Risk-Based Approach

IDENTIFY • Potential risks to fair customer outcomes across business

OPERATIONALISE

• TCF across all aspects of the business including STRATEGY

EMBEDDING • Fair customer outcomes in all areas of the product lifecycle

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REFLECTION AT GUARDRISK Guardrisk has issued the guideline documents to its cell captive partners to align to the said PPR requirements. This includes:

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NEXT STEPS FOR ANY QUERIES CONTACT YOUR GUARDRISK PORTFOLIO MANAGER,

OR E-MAIL COMPLIANCE@GUARDRISK.CO.ZA

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Thank you