National Treasury issued the amendment of regulations made under section 70 of the Short- and Long-term insurance acts on 23 December 2011 with an effective date of 1 January 2012. The binder regulations commenced on 1 January 2012. The transitional arrangements was that all binder agreements concluded before 1/1/2012 must be aligned by 31 December 2012.
The binder regulations are fully enacted and insurers are expected to be fully compliant. The Financial Services Board (“FSB”) performed reviews on some of the larger insurers which are subject to greater exposure to the binder regulations. The FSB recently analysed information submitted to them by insures in order to determine what amounts to a reasonable fee payable to non-mandated intermediaries for the rendering of binder functions, in particular the functions listed under sections 48A (1) (a) and 49A (1) (a) of the Short- and Long-term insurance acts (enter into, vary or renew a policy).
The FSB on the 11th July 2014 released proposed amendments to the binder regulations, which addresses “emerging undesirable practices and regulatory gaps” that have come to light since the regulations were first published in 2012. The proposed amendments are currently out for public comments.
KPMG can assist with identifying regulatory gaps in your organisation’s binder and outsourcing internal control processes, such as:
- On-boarding of binder holders
- Contracting with binder holder holders
- Monitor and managing of binder relationships
- Data transferring between binder holder and you the insurer
KPMG are also well placed to assist in setting up binder internal control processes to ensure compliance with binder and outsourcing regulations.