IGF Intermediaries Guarantee Facility - Actions and Responsibility of Insurers and Intermediaries

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Regulation 4, Section 45 of the Short Term Insurance Act, 1998

4.1(1)
A short-term insurer may, subject to subregulation (2), in writing authorize an independent intermediary to receive, hold or in any other manner deal with premiums payable to it under short-term policies.

(2) A person shall not be authorized, as contemplated in subregulation (1) unless that person has provided security, to the extent and in accordance with the requirements of this Part, in respect of his or her obligation in terms of Regulation (4.3) by means of:

(a) a guarantee policy issued by a short-term insurer registered to do so in accordance with a guarantee facility created by short-term insurers generally for the purposes of providing such security; or

(b) a contract which, but for the fact that the undertaking concerned is given by a bank, would be a guarantee policy,

and under which policy benefits are to be provided in the event of the failure of that person to meet those obligations.

Actions and Responsibility of Insurers and Intermediaries

Insurers

Each insurer must individually and specifically authorize in writing each of his intermediaries, whom he empowers to collect premiums on his behalf.

The insurer must ensure that the authorized intermediary has a current guarantee issued in terms of Regulation 4, Section 45 of the Short Term Insurance Act, of 1998.

Intermediaries

Intermediaries who at present receive premiums on behalf of insurers must insist that they are specifically authorized in writing by those insurers.

Intermediaries must be in possession of a guarantee that complies with Regulation 4, Section 45 of the Short Term Insurance Act, of 1998 for an amount equal to 30% of the net premiums received by them in their last financial year (based on a minimum guarantee of R100 000 and a maximum guarantee of R80 000 000 - as at 01 April 2010).

SEE FSB NOTICE

If the intermediary has a collecting agency or a third party receiving premiums on their behalf for insurers, they should ensure that the agency or third party has a guarantee in terms of Regulation 4, Section 45 of the Short Term Insurance Act, of 1998.

Intermediaries are deemed to “receive premiums” where the premium passes through a bank account controlled by the intermediary.

Where the intermediary merely collects cheques issued in favor of the insurer from the client and delivers to the insurer, no authorization or guarantee is required.

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