The National Treasury (NT) today publishes for comment draft amendments to the Regulations (Regulations) to be made by the Minister of Finance in terms of the Long-term Insurance (LTI) and Short-term Insurance (STI) Acts.
The draft amendments to the Regulations aim to –
- align the Regulations (specifically terminology) with the Insurance Act, 2017 (Insurance Act) as enacted on 18 January 2018;
- further strengthen policyholder protection by providing for more robust legislative requirements pertaining to the collection of premiums by intermediaries; and
- amend the binder regulations to provide for certain procurement and transformation requirements.
The Insurance Act provides for the prudential legislative framework for insurers. The commencement date of the Insurance Act is still to be determined by the Minister. The Financial Services Board (FSB) hopes the necessary consultation process will be completed in time so that commencement of the Insurance Act can be 1 July 2018.
The Insurance Act repeals all prudential requirements that are currently provided for in the LTI Act and STI Act, but provides for a two-year transition period for insurers to migrate from the existing to new framework. Non-prudential sections in the LTI Act and STI Act, will remain in force in parallel to the new prudential requirements, to provide an interim conduct of business legal framework for insurers pending implementation of the envisaged Conduct of Financial Institutions Act (still in drafting phase).
Over this transition period it is important that insurers are subject to equivalent regulatory requirements for market conduct across the existing and new frameworks, in order to promote regulatory certainty for regulated entities, and ensure a level regulatory playing field across the two frameworks to mitigate the risk of regulatory arbitrage (regulated entities should not be disadvantaged by entering into the new framework, relative to those that have not yet migrated across).
See attachments for more information.
Issued by National Treasury