To Subscribe please click here

Moonstone logo
Moonstone Monitor -  31 August 2017
In This Week's Newsletter
 
From the Crow's Nest
Understanding Consequential Loss – Make sure you understand your insurer’s approach
 
Your Practice Made Perfect
Health Market Inquiry Update – Administrative timelines changed by Competition Commission
Moonstone Regulatory Update Workshops 2017 – Seats filling up fast. Please book today. CPD points available
Unintended Consequences of NHI – Poorest scheme members hardest hit if tax credits fall away
The August edition of the informative Insurance Gateway Newsletter can be downloaded here
 
Technologically Speaking
The future of financial advice in SA - New support tool delivers video meeting and digital signing capabilities
 
Regulatory Examinations
Legislation Handbook and Preparation Guide for REs – Back in stock and available online
Schedule for 2017
Frequently Asked Regulatory Exam Questions
 
Careers Platform
Are you hiring? Advertise your position on Moonstone’s Career Platform
Featured Positions
 
In Lighter Wyn
Short and sweet and finish en klaar
Paul Kruger 2017-08-03
Paul Kruger Author/Editor
 
 
 
 

SuiteBox vertical banner 2017-01-12
What some people mistake for the high cost of living is really the cost of high living – Doug Larson
 
Please connect with us: www.moonstone.co.za
pkruger@moonstoneinfo.com or 021 883 8000
 
Facebook   Twitter   LinkedIn   YouTube  
Distributed to 48,835 subscribers.

To advertise with us
click here

 
From the Crow's Nest
From the Crow's Nest
Understanding Consequential Loss
by Staff Writer
In a world that seems to constantly produce new forms of risk, it is wise for the public to rely on insurance intermediaries to benefit from their knowledge, experience and expertise, coupled with a good working relationship with one or more insurers, to prevent unpleasant surprises at the time a claim arises.

Even the most experienced advisers at times run into new scenarios which often lead to a dispute on how the claim should be handled. One of these grey areas concerns what is termed ‘consequential loss’ in the short-term insurance industry.

BusinessDirectory defines consequential loss as: “Indirect loss which accompanies an insured loss, such as loss of earnings resulting from a burnt down business that was insured against fire. Consequential losses are not covered by ordinary insurance policies, unless specifically included on payment of additional premium.”

In commercial insurance, it could happen when a fire takes place at a warehouse (the direct loss or damage) and the business, being unable to operate as a result, loses its revenue (the consequential loss). In a scenario like this, the business usually should have business interruption insurance in place to provide for the consequential loss.

But questions often do arise about the consequential loss – particularly when it comes to the car insurance sections of personal lines policies. For example, a local insurance broker recently dealt with a claim that was repudiated by an insurer on the grounds that the damage sustained to the insured’s vehicle was as a result of consequential loss. In this instance the vehicle’s engine seized because of loss of water from the radiator while the vehicle was driven following an accident. The short-term insurance ombudsman ruled against the insurer on the basis that it would not be fair and reasonable to expect the insured to have the same knowledge and experience as that of a vehicle engineer.

Another tricky scenario played itself out earlier this year when Ford Kuga vehicles caught fire as a result of mechanical failure. Mechanically, the issue appeared to be insufficient cooling to prevent material warping of the engine’s aluminium cylinder head, which cracked, leaking oil into a hot engine compartment, resulting in fire. A number of insurers rejected these claims on the basis of the exclusion of damage caused by mechanical failure. This means that any consequence of the initial damage (in this case, fire) was not covered in terms of the insurance policy.

But some insurers argued that the fire that resulted from the mechanical failure itself should not be excluded because the fire was a consequential loss thereof. In other words, the client is covered if the consequential loss (or damage) to any other mechanical component of the vehicle is directly linked to the functionality and working of the first breakdown (an insufficient cooling system).

In scenarios like these, some short-term insurers may also refer to the insured’s responsibility of ‘duty of care’. This means that a client (insured) is obligated to take all reasonable steps to prevent loss or damage to their vehicle. If the insured had furthermore applied the principles of ‘duty of care’ – in this case including taking the vehicle to the dealership to have the defective parts inspected and replaced, the insurer may likely honour any claims arising.

Issues around consequential loss are not necessarily easy to wrap one’s head around. And the approach to it varies from insurer to insurer. However, insurance intermediaries would really do well to understand the different approaches thereof to ensure that their clients are adequately protected.

Perhaps this is a timely wake-up call to discuss your insurer’s approach to consequential loss to ensure that you make provision for the possibility of such an event occurring.
Top of Page
 
GTC banner 2017-08-10
What if you could focus on doing what you love - looking after your clients?

Leading Independent Financial Advisory (IFA) practices are using GTC’s Strategic Partner solution to:

   - increase time with clients
   - increase earnings
   - reduce costs

Shouldn’t you too?

Our staff and systems deliver exceptional service, increasing revenues and saving costs and time for you, enabling you to build value for succession.

With offices nationally, we are well-placed to help you.

Call us to discuss a strategic partnership.

t. +27 (0) 10 597 6858
e. info@gtc.co.za
w.
www.gtc.co.za

An authorised Financial Services Provider FSP no. 731
.
Your Practice Made Perfect
Your Practice
Health Market Inquiry Update
Investigations into the health market by the Competition Commission appear to have hit a bit of a hitch.

A media statement confirmed that the “Revised Administrative Timeline”, published on 1 December 2016 has been withdrawn and will be replaced with a “Provisional Findings and Recommendations Report” on 30 November 2017.

Legalbrief today notes:

“…according to a media statement announcing this last week, the team conducting the inquiry will continue to ‘engage with stakeholders on various matters’. In so doing, they may choose to: request information; call for submissions; conduct consultations; hold discussion seminars; and possibly even publish research reports.

While a deadline for completing the final document has yet to be determined, it is clearly not going to be available this year.

It is not clear from last week’s announcement why it became necessary to make yet another change to the timeline for an inquiry that began in October 2015, when its terms of reference were gazetted.
Top of Page
 
Moonstone RE workshop banner
 
Moonstone Regulatory Update Workshops 2017
Please note: this is NOT regulatory examination training.

The following topics will be covered by Billy Seyffert, COO Moonstone Compliance, and Alan Holton, industry legal expert:

  • A brief update on the RDR

  • The proposed changes to the Long- and Short-term Insurance Regulations and the impact on remuneration

  • The proposed changes to the Policy Holder Protection Rules with a focus on replacement business

  • The Financial Intelligence Centre Amendment Act and how it impacts Accountable Institutions

  • The future of Fit and Proper and what will be expected of intermediaries

The workshops are scheduled as follows:
 
Town Venue Date
Port Elizabeth PE Golf Club 05/09/2017
East London EL Golf Club 06/09/2017
Cape Town The River Club 11/09/2017
Johannesburg Houghton Golf Club 19/09/2017
Pretoria Diep in die Berg 20/09/2017
Durban Coastlands Hotel Umhlanga 21/09/2017
Bloemfontein Kopano Nokeng 27/09/2017


Click here for more details and to register.
 

CPD Points


Attendees who wish to apply for CPD points with their industry bodies can request a certificate of attendance after the event. This document will contain the required information for such application.

Top of Page
 
SuiteBox horizontal banner 2017-01-12
 
Unintended Consequences of NHI
Research by economics consultancy Econex looked at the impact of removing tax credits to medical schemes and then reallocating them to funding National Health Insurance (NHI) as suggested by the 2017 White Paper.

A report in Fin24 notes that tax credits are paid to principal members of medical schemes to “reimburse” them for making use of private healthcare. During 2014/15 the amount of tax credits paid to these principal members was approximately R18.5bn.

During 2015/16 the total annual tax rebate paid to a principal member without dependents came to R3 240. A rebate of R12 966 was paid to a principal member with as much as four dependents.

Econex focused specifically on how the removal of the medical scheme tax credits would make medical scheme membership unaffordable, if the affordability threshold is 12.85% of income.

Findings

For the poorest 20% of medical scheme members, tax credit reduces monthly contributions from R820.97 to R583.66. This reduces the proportion of household income allocated to medical aids from 35% to 22.04%.

For the wealthiest 20% of medical scheme members, the tax credit reduces the monthly contributions from R1 953.35 to R1 720.39. This reduces the proportion of household income from 6.29% to 5.50%.

For the poorest 20% of beneficiaries, the tax credit reduces the cost of medical scheme expenditure on average more than 40%. The cost reduction is an average of 13.54% for the wealthiest beneficiaries.

Almost half (49.07%) of the poorest beneficiaries will move above the affordability threshold, indicating that the poorer medical scheme beneficiaries are impacted the most by the removal of tax credits.

These findings indicate that a lot more research is required before proceeding with the NHI. It would make a lot more sense to address the deterioration in public healthcare over the last decade than proceed with a pie in the sky concept which has very little prospect of success. Surely the immediate needs of the poor must carry more weight than a badly assessed pipe dream?
Top of Page
 
MBSE banner

Technologically Speaking
Suitebox 2017-06-29
Moonstone Information Refinery
The future of financial advice in SA
The SuiteBox client engagement and support tool delivers video meeting and digital signing capabilities to financial advisers.

Rapid advances in fintech provide a host of solutions that streamline the delivery of financial advice, while driving customer engagement, enhancing productivity, minimising costs and ensuring workflow-embedded risk management and compliance.

Among the most exciting of these fintech solutions is SuiteBox. SuiteBox allows advisers and their clients to meet and discuss financial solutions, whether document or web based, virtually, as if in the same room. Contracts and agreements can further be signed online with digital identity certification adding a layer of validity to the transaction process.

"Not only can technology like SuiteBox improve and enhance client/adviser interaction, engagement and capacity, it does so with adherence to the highest standards of compliance, record keeping and cost effectiveness. Importantly, it will free up the adviser to focus on delivering a quality advice experience to his or her clients,” adds Hjalmar Bekker, Director of Moonstone Information Refinery, SuiteBox distributor for Africa.

Click here to read more.


Suitebox Media contact

Neil Summers, Sales Manager, Moonstone Business Services
Mobile: +27729088994
Email: neil@suitebox.com
Top of Page
Regulatory Examinations
Regulatory exams banner
RE Schedule updated
Top of Page
 
Frequently Asked Regulatory Exam Questions
1. What exam must I write?
Both the RE 5 and RE  are Level One exams. RE 5 is for Representatives and RE1 for Key Individuals. The RE 3 exam is for licence category II candidates.
2. How much does it cost?
The FSB determines the fee. Currently it costs R1163 per exam, also in the case of a re-write.
3. What preparation material is available?
Fully updated resources are available for those requiring access to the legislation applicable to the regulatory examinations:
  Please make sure that you first read the FSB’s Preparation Guide to make sure you follow the right process in preparing. Page seven includes a recent amendment to guide candidates in studying in the correct manner.
  Click on the following highlighted sections to download the relevant updated Inseta learning material for key individuals, RE 1, and representatives, RE 5.
  LexisNexis provides a “Legislation Handbook” together with a “Preparation Guide” containing the qualifying criteria, with a link to the relevant legislation.
  The Juta FAIS Pocket Statutes also contains a CD with a comprehensive list of updated supplementary legislative material for reference purposes. Please click here to order this from our online shop.
  The FSB’s telematics broadcast on the RE 1 and RE 5 provides a good introduction and overview, and can also be ordered online in:
    DVD format or on a
USB memory stick
4. Where can I write? Go to: http://www.faisexam.co.za/show_venues
5. What dates are available?
Go to: http://www.faisexam.co.za/view_schedule
6. What training is available?
As an Exam body we are not allowed to recommend companies that offer face-to-face Regulatory exam classes. You can try Google for someone in your area. Bear in mind that this exam tests your knowledge about the laws applicable to the provision of financial advice and intermediary services. The questions are based on very specific qualifying criteria set out in the FSB preparation guide. Any training that does not have this as a basis will not prepare you properly for the exam. Do your own research and don’t just accept what others say.
7. Where can I buy old question papers?
There are no genuine “old question papers” available. Be very careful when buying such preparation aids as some of those on offer are not in line with the high standard prevailing in the actual exams and often lead to a false sense of knowledge which is sadly exposed when confronted by the actual exam. Follow the guidelines provided in the FSB Preparation Guide and you are far more likely to achieve success.
Top of Page
Careers Platform
Are you hiring? Advertise your position on Moonstone’s Career Platform
Careers Platform Packages

•   The Moonstone website - www.moonstone.co.za - enjoys an average of 15 000 visits and approximately 39 000 page views per month.
Moonstone boasts an exclusive newsletter mailing list of over 48000 dedicated financial decision makers who receive 2 newsletters per week.
Our audience is relevant and industry specific: individual and corporate advisors and brokers in the following financial sectors: Investment, Risk, Healthcare, Banking, Retirement, and Insurance.


Advertise


Top of Page
 
Featured Positions
  • Short Term Commercial and Domestic Sales Consultant: Wealth Solutions Capital Insurance Brokers, Bedfordview - We are looking for dynamic and energetic go getters for short term commercial and personal lines insurance, as well as for Financial Advisers. Read More

  • Compliance Officer under Supervision: Moonstone Compliance, Johannesburg - The role will provide a practical internship, during which the applicant will receive on the job training and mentorship in the provision of outsourced compliance and risk management services to clients in the financial services industry. Read More

  • Financial Advisors: Odinfin, Irene, Pretoria - We are looking for insurance sales agents to join our successful team. Read More

Top of Page
In Lighter Wyn
In Lighter Wyn
Short and sweet and finish en klaar

Short and Sweet

Best wishes
Email from father to son: Treasure today son. It will be the happiest day of your life.
Son: Thanks Dad, but the wedding is tomorrow.
Father: I know.

Trump and Hitler
"Trump's nothing like Hitler. There's no way he could write a book." - Frankie Boyle.

Go Granny
My Grandmother is over eighty and still doesn't need glasses. Drinks right out of the bottle – Henny Youngman.

Still going
My grandmother started walking five miles a day when she was sixty. She's ninety-seven now, and we have no idea where she is - Ellen DeGeneres.

Finish en Klaar

NHI in 10 years time?
 

NHI in 10 years time?

Top of Page


Moonstone 48000 subscribers banner

 

Tel: +27 21 883 8000   |   Fax: +27 21 883 8005
info@moonstoneinfo.com
www.moonstone.co.za


P.O. Box 12662, Die Boord, Stellenbosch, 7613, Republic of South Africa

Disclaimer: Services and products advertised by external product suppliers in this newsletter are paid for by the respective suppliers. Moonstone does not endorse any opinions, conclusions, data, products, services or other information contained in this e-mail which is unrelated to the official business of Moonstone and furthermore accepts no liability in respect of the unauthorised use of its e-mail facility or the sending of e-mail communications for other than strictly business purposes.

The complete disclaimer can be accessed here.
©2015 Moonstone. All rights reserved.