Chapter 7 - The South African Regulatory Environment Flashcards
Requirements and responsibilities of HAF (according to GOI 3) : (9)
- Responsible for providing opinion and input to the board about operations, efficiencies and effectiveness of components of risk management and internal controls
- Must be fit and proper
- Their remuneration must not be predominantly linked to the financial performance of the insurer and must mot be inconsistent with the long-term strategy and financial soundness of the insurer
- Must have appropriate segregation of duties from operational business line responsibilities (board is responsible for ensuring this)
- Must have sufficient seniority and authority to be effective
- Must have reporting lines that support their independence
- Must have unrestricted access to relevant information
- Must, without delay, notify the board of any reasonable suspicion that any financial sector law has been breached
- If the law being contravened is the Financial Sector Regulation Act (2017) then the head of control function must report to the PA immediately
Maintenance of the financially sound condition section of the Insurance Act states that: (2)
- Insurer must maintain its business in a financially sound condition by holding eligible own funds that are atleast equal to the MCR or SCR, as prescribed, whichever one is bigger
- Similarly, for controlling company iro an insurance group muat maintain the insurance group in a financially sound condition, by holding group eligible own funds that are at least equal to the group SCR as prescribed
Own Risk and Solvency Assessment (ORSA) assesses the: (4)
- Resilience of insurer’s solvency across a range of scenarios
- Overall solvency needs of the insurer in light of risk appetite, profile and business strategy
- Compliance on a continuous basis to financial soundness requirements
- How much the insurer’s risk profile deviates from the implied risk profile underlying the financial soundness requirements
ORSA must be done: (3)
- Annually
- When risk profile changes materially
- Upon request by the PA
Assessments of ORSA must include: (6)
- Potential future changes in risk profile in stressed situations
- Quantity and quality of own funds needed over the planning period
- Quantity and quality of own find available
- Overall solvency needs in quantitative form
- Qualitative descriptions of the risks
- Any deviations between insurer’s risk profile and that implied by SCR calculation
Define the supervisory review process (SRP):
Process used by the PA to assess the ability of the insurer’s governance system to identify, assess, monitor and manage risks (incl potential risks)
Supervisory Review Process (SRP) considers the insurer’s: (6)
- ORSA and other systems of governance
- Technical provisions
- Capital requirements
- Investment rules
- Quality and quantity of Own Funds
- Use of internal models
The returns that needs to be submitted by LI company: (3)
- ORSA needs to be submitted within 2 weeks of board approval
- Must submit anaudited quarterly returns to the PA 1 month after the end of each quarter of the calendar year.
- Conduct of Business Report (CBR) needs to be submitted within 1 month of each quarter
Conduct of Business Reporting (CBR) includes the following: (6)
- Commission, binder fees, and other payments
- Advertising and marketing spend, split by marketing channel
- Business composition, incl number of business in force, new benefits issued, and benefits cancellations
- Claims management, including reported, paid, and repudiated claims in the period
- Complaint handling, incl complaints received for various reasons and results of complaints
- Add-on benefits offered and number of each benefit issued
Aims of FAIS act is to achieve: (3)
- Professional conduct
- Better informed clients
- A professional, responsible sector
Purposes of the National Credit Act (NCA): (6)
- Improve the accessibility of the credit market for previously disadvantaged consumers
- Enhance consumer rights and education
- Better regulation of credit
- Consistent treatment of all consumers and credit providers
- Responsible borrowing and elimination of reckless lending
- Redress the balance of power between consumers and credit providers
Aims of Financial Intelligence Centre Act (FICA): (2)
- To prevent miney laundering and unlawful activities such as terrorism (which is primarily financed through money laundering)
- To protect the financial interests of clients
The following is excluded from the Ombud for Long Term Insurance: (5)
- Conduct of intermediaries on policies sold after 1 October 2004 (falls to FAIS ombud)
- Purely administrative issues such as cancelling a policy etc
- Short-term insurance
- Unit trusts or other investments
- Complaints already going through legal proceedings
Areas where firms need to demonstrate that their processes are consistent with TCF: (6)
- Product and service design
- Promotion and marketing
- Advice
- Point of sale
- After point of sale
- Complaints and claims handling
Aims of POPIA:
Aims to promote the protection of personal info by public and private entities.
It governs how they handle, store, and secure said data.
Essentially, the purpose of the act is to protect people from harm by protecting their personal information
