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The FSCA Commissioner hosts engagement with the Insurance industry |
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The FSCA recently hosted an engagement with the insurance industry in a special session with the FSCA Commissioner Unathi Kamlana. A second of its kind this quarter – the first being held with prominent members of the banking industry, these sessions are a result of the FSCA’s efforts to up engagement efforts with the various sectors of the financial services industry. This is in line with one of our strategic objectives of accelerating transformation of the FSCA into a socially responsible, efficient, and responsive conduct regulator.
The session commenced with the FSCA Commissioner – Unathi Kamlana touching base on what some of the impacts of the Covid-19 Pandemic have been on the Insurance Sector, inclusive of amongst others:
- Premium relief measures for policyholders
- Certain exemptions from legislation to provide operational relief to insurers
- Accelerated pace of digitalisation and migration from face-to-face to virtual intermediation
- Uncertainty regarding insurer liability - varying interpretations of policy wording for business interruption cover, high volume of claims repudiations, interim claims payments
- More claims occurring in 2020, but values paid out were less than the average life policy, possibly due to policyholders reducing the value of their cover.
Kamlana also touched on the claims that occurred as a result of the Gauteng and KwaZulu Natal Civil unrest in July 2021, noting that it amounted to approximately R32 billion and that the FSCA has been in engagements with South African Special Risk Insurance Association (SASRIA) to ensure timeous payment of claims. |
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| The FSCA’s Regulatory Strategy was also an important aspect of the session with the Commissioner outlining that the regulator has been hard at work ensuring that it achieves its vision of fostering a fair, efficient, and resilient financial system that supports inclusive and sustainable economic growth in South Africa. He emphasised the revised strategic objectives of the FSCA to all those in attendance, those being: |
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- Improve industry practices to achieve fair outcomes for financial customers
- Act against misconduct to support confidence and integrity in the financial sector
- Promote the development of an innovative, inclusive and sustainable financial sector
- Empower households and small businesses to be financially resilient
- Accelerate the transformation of the FSCA into a socially responsible, efficient, and responsive conduct regulator
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During the session Farzana Badat, the Deputy Commissioner responsible for the Insurers and Retirement Funds Administrators department, outlined the FSCA Supervisory approach noting that it is guided by a risk-based supervisory framework aimed at harmonising supervisory activities across the various sectors and supported by a range of supervisory tools. The objectives of the approach involve pre-emptively identifying and assessing risks, including cross-sector risks, risks related to specific financial sub-sectors and risks in respect of individual financial institutions; intervening on a timely basis where the governance, culture or practices of the supervised financial institution are imprudent, unsafe, endanger the integrity of the markets or do not deliver appropriate outcomes to consumers; and Address risks in a systematic manner, prioritising what matters most. |
This supervisory approach also aims to promote consistent embedment of the following outcomes for policyholders: |
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Key supervisory focus areas:
- Risks accelerated by digitalisation
- Unilateral movement of books of business driven by increased fees
- Underwriting at claims stage
- Premium increases to relieve revenue pressures
- Poor data quality and integration in group schemes and funeral books
- Funeral and microinsurance policies inconsistent with the PPRs
- Suicide clauses exceeding 12 months, waiting periods exceeding 6 months
- Inadequate disclosures for premium reviews/increases and 3rd party non-insurance related benefits
- Lack of individual notice and policyholder consent when terminating intermediary agreements
- Integration of climate risk in product offerings
- Engagement on Omni-Conduct of Business Return
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The FSCA also applauded the industry for showing a general improvement in how they are reporting through their Conduct of Business Returns; better quality of data, management information and understanding of market conduct indicators; for showing agility in how it adapts to rapidly changing situations for example the Covid-19 pandemic, civil unrest and natural disasters such as the KwaZulu Natal floods; and an increase in insurers proactively engaging the FSCA on new ventures, products and concerns.
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| Our Vision |
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| To foster a fair, efficient, and resilient financial system that supports inclusive and sustainable economic growth in South Africa. |
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Contact info
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Call Centre: (+27) 0800 20 37 22 4
Switchboard: (+27) 12 428 8000 |
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41 Matroosberg Road, Block B, Riverwalk Office Park, Ashlea Gardens, Pretoria, 0002 |
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