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Moonstone Monitor - 5 October 2017 |
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Paul Kruger
Author/Editor |
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The Chinese use two brush strokes to write the word 'crisis.' One brush
stroke stands for danger; the other for opportunity. In a crisis, be aware
of the danger, but recognize the opportunity - John F Kennedy |
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Distributed to 49,200 subscribers.
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From the Crow's Nest |
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Trends in Motor Insurance |
At the launch of the 2016 Annual Report from the Short-term Ombud, she
elected to deviate slightly from the usual statistical analysis to highlight
some interesting trends from the report with particular reference to motor
insurance.
Motor makes up the majority of the matters that our office deals with,
comprising 49% of the formal complaints investigated by our office and
accounting for 60% of the Rand value recovered by OSTI on behalf of consumers.
Technological advancements and the ever increasing impact of social media and
the big brother syndrome have had a significant impact on the way in which the
insurance industry operates. Consumers who may in the past have succeeded in
taking a chance or presenting “alternative facts” to insurance companies are
often caught out by comments made on social media platforms that contradict
information that was given to their insurance company at the time that a policy
was taken out.
A common illustration of this – and one that is all too familiar to our office –
is alternative fact information given about who the regular driver of a vehicle
will be. Older drivers pay significantly lower premiums than younger drivers.
The difference in premium can be significant. Certainly significant enough to
encourage consumers to provide inaccurate information about who the regular
driver of a vehicle will be. Our office sees far too many claims being submitted
where, for example, parents have represented that they will be the regular
driver of a vehicle when, in fact, the vehicle was purchased by them for use by
their child. Paying the lower premium is all well and good until a loss is
suffered. Simple desk-top investigations using Facebook or other social media
searches can all too easily reveal misrepresentations made by consumers who
forget to cover their tracks when making misrepresentations to their insurance
companies.
However, as effectively as insurers are at making use of technological
advancements during claims assessment stage, OSTI believes that more inroads
should be made by insurers into using technology and available information
during sales stage.
In this regard I am referring to underwriting information that could be easily
accessible to insurers through database sharing or information pooling rather
than obtaining it from consumers during sales conversations. For example, claims
history or years of uninterrupted insurance.
OSTI sees a large number of complaints submitted where information relating to
previous claims is asked by the sales consultant during the sales call and
inaccurate or incorrect information is given simply because an insured could not
accurately recall her previous claims history.
In modern times where information is available by reference to a database, there
should be no need to leave the accuracy of such disclosure to the vagaries of
human recollection.
Of course, that is not to say that consumers should not be held accountable for
telling lies or making misrepresentations. And of course the industry remains
cautious and must be vigilant because of the high incidences of consumer fraud
that exist in the market.
In my year in office I learnt a lot about the high levels of creativity behind
opportunistic insureds looking to make a quick buck from the insurance industry.
The types of suspicious claims that cross the desks of OSTI’s ombudsmen are too
numerous to mention. However, a disproportionate number of so-called paper
vehicle claims come to OSTI’s office. A paper vehicle is one that does not
actually exist, other than on paper. Insurance is taken out for the non-existent
vehicle using fraudulent registration papers. A theft of the vehicle is then
reported in an effort to receive a cash pay-out for the non-existent vehicle.
It is in an effort to avoid claims of this nature that many insurers require
vehicles to be inspected before insurance kicks in. |
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An authorised Financial Services Provider FSP no. 731 |
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Your Practice Made Perfect |
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In good faith |
A case study recently published by the Short-term Ombudsman reiterates
the basic principle that short-term insurance is a contract entered into
in good faith and that there was no obligation on an insurer to verify
the information at the sales stage of the policy.
Mr Y submitted a claim for a single motor vehicle accident. The insurer
rejected the claim on the grounds of non-disclosure of previous losses
suffered by Mr Y, which according to the insurer, was a breach of the
policy terms and conditions.
During the telephonic sale of the insurance policy, Mr Y was asked to
disclose losses suffered in the last five years. He informed the insurer
that he had suffered one loss in 2011.
During the validation of the claim, the insurer established that Mr Y
had three more losses within this period, which were not disclosed at
the inception of the policy. Had the losses been disclosed at the sales
stage, the premium would have been calculated differently. The insurer
therefore suffered a prejudice of 23.6% in respect of the premiums.
The insurer submitted that it had not considered a proportional
settlement of the claim due to the fact that the misrepresentation was
made intentionally. Mr. Y disputed this, arguing that he disclosed what
he could reasonably remember.
The Ombudsman pointed out that the losses which were not disclosed fell
within the five year period on which the insurer’s questions were based
and further, that the recorded sales conversation did not give any
indication that Mr Y was uncertain about what the insurer required in
order to correctly underwrite the risk.
The insurer had discharged its obligation in terms of the Policyholder
Protection Rules in that it had created a clear duty of disclosure and
that the insured should, in the position of a reasonable person, have
known that he needed to disclose all losses suffered in the last five
years to the insurer. The Ombudsman therefore upheld the insurer’s
decision to decline liability.
An insurance contract is in effect entered into on a basis of mutual
trust. The insurer undertakes to fulfil its obligations under the
contract, and the insured to provide all relevant information required
to assess the risk. Due to strict regulation, insurers are bound to
fulfil their obligations, but little happens to an insured who does not.
Imagine the outcry if a fraud charge was laid against the insured?
Consumerism protects these clients, and the only possible remedy is
stricter underwriting upfront to protect both the underwriter and
innocent policyholders. |
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FSB Regulatory Updates
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The FSB published the following information on draft documents for
comment in its FAIS Newsletter 24.
Conduct of Business Returns (CoBR)
The draft FAIS CoBR was published for comment on 6 December 2016.
Comments were received from 33 respondents, which include industry
associations, compliance practices, FSPs and individual respondents. The
feedback was collated and the Registrar is considering the comments
against the draft document. Feedback will be provided to industry in the
last quarter of the year.
Fit and Proper amendments (F&P)
The draft F&P was published for comment in October 2016. Comments were
received from 26 respondents, including industry associations,
compliance practices and individual FSPs. This process should also be
finalised in the last quarter of the year.
Seeing that the “last quarter of the year” started 5 days ago, it can be
any day now.
The Fit and Proper amendments are of particular interest to those who
are busy preparing for the Regulatory Exams, as the question bank will
need to be amended. This means that the study material will also need to
be updated. It would be wise, therefore, to write the REs as soon as you
are ready, rather than postpone it unnecessarily. |
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Compliance audit on credit life insurance policies
By Gerrit Viviers
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Since the publication of the final credit life insurance regulations
(the Regulations) that came into effect on 10 August 2017, Moonstone
received numerous queries relating to the compliance requirements
imposed by the Regulations.
In the National Credit Regulator’s (NCR) annual report for the period
2016/2017, both the Minister and the NCR’s Credit Provider Compliance
Manager specifically identified the compliance monitoring of the
Regulations as the main focus for the upcoming year. Many credit
providers and insurers will very likely be subject to an NCR monitoring
exercise to assess their compliance with the Regulations.
Moonstone now offers a compliance audit service specifically designed to
assess credit providers’ and insurers’ compliance with the Regulations,
including:
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The maximum prescribed fee calculations for credit life insurance
premiums;
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The minimum policy benefits;
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The permitted policy exclusions and limitations;
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The avoidance of prohibited conduct;
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The permitted waiting periods; and
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The other compliance requirements imposed by the Regulations.
For peace of mind regarding the compliance status of your credit life
insurance products, contact Moonstone today.
Moonstone has an NCA Specialist to render NCA compliance services to its
clients. Should you want to enquire about its product audit service,
please contact Gerrit Viviers on 021 883 8000 or by email to
gviviers@moonstonecompliance.co.za.
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Technologically Speaking
Moonstone Information Refinery |
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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
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Regulatory Examinations
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Frequently Asked Regulatory Exam
Questions |
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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.
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How much does it cost?
The FSB determines the fee. Currently it costs R1163 per exam, also in
the case of a re-write.
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What preparation material is available?
Fully updated resources are available for those requiring access to the
legislation applicable to the regulatory examinations:
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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. |
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Click on the following highlighted sections to download the relevant
updated Inseta learning material for key individuals,
RE 1, and
representatives,
RE 5. |
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LexisNexis provides a “Legislation Handbook” together with a
“Preparation Guide” containing the qualifying criteria, with a link to
the relevant legislation. |
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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. |
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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: |
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DVD format or on a
USB memory stick
MP4 direct download - 2 Gb |
| 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. |
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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. |
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Careers Platform
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Are you hiring? Advertise your position on Moonstone’s Career Platform
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The Moonstone website -
www.moonstone.co.za
- enjoys an average of 15 000 visits and approximately 39 000 page views per month. |
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Moonstone boasts an exclusive newsletter mailing list of over 49000
dedicated financial decision makers who receive 2 newsletters per week. |
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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. |
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Featured Positions |
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Business Development
Manager:
Sovereign Group, Johannesburg - If you are a Graduate or admitted
attorney, a confident public speaker with general company, commercial
and trust law and happy to spend 50% of your time out of the office in
meetings, selling Sovereign Trust’s services, then
Read More
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Marketing & Events
Coordinator:
Sovereign Group, Cape Town - The applicant must be a fluent and
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obtained from a reputable tertiary institution. Applicants with a
marketing background will receive preference.
Read More
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Legal/Administration
Assistant Position (Half Day):
Sovereign Group, Cape Town - The successful applicant will assist
two to three lawyers in the office, must have a relevant degree and be
fluent and articulate in English and Afrikaans.
Read More
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Financial Advisor:
Origin Financial, Cape Town - The core function of the successful
candidate is to look for new business and maintain relationships with
clients. Must have own car & driver’s licence as well as RE certificate.
Read More
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Financial Advisors:
Quantum Invest (Pty) Ltd, Randburg Ridge, Johannesburg - If you have
a Matric and RE5 Certificate with 8 months experience in the Insurance
Industry, then
Read More
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In Lighter Wyn |
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Uber my dead body |
Thanks Roche.
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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:
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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.
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©2015 Moonstone. All rights reserved. |
