Regulatory Alerts2020-01-20
FAIS Micro Insurance Presentation
The Financial Sector Conduct Authority (FSCA) outlines key compliance requirements for microinsurance providers under the FAIS Act, distinguishing between financial services and product suppliers. Entities must verify that tied agents and independent brokers maintain fit-and-proper status while adhering to appropriate retail distribution channels. Organizations are required to implement robust corporate governance structures, including regular representative register updates and independent board oversight, to ensure effective leadership and regulatory alignment.
PRESENTATION BY : JM MBELE
MICRO INSURANCE PRESENTATION TOPICS TO BE DISCUSSED • Definition of Micro Insurance • Financial Services provider versus Financial Product Provider • Retail Distribution Channel/s • Compliance with your choice of a distribution Channel • Governance
INTRODUCTION & DEFINITION Where everyone fits in. (Inclusive Financial Sector). Definition as taken from the Micro Insurance Policy Paper: Microinsurance refers to insurance that is accessed by the low-income population, provided by a variety of different providers and is managed in accordance with generally accepted insurance practice. It forms part of the broader insurance market, distinguished by its particular focus on the low-income market, which translates into distinct means of product design and distribution Level of functionality: Functioning at a level of Insurance Companies.
FINANCIAL SERVICES PROVIDER VERSUS A FINANCIAL PRODUCT PROVIDER/SUPPLIER FINANCIAL SERVICES PROVIDER(FSP): • Render financial services (advice & intermediary services) on a financial product to the members of the public. The conduct/behavior of the agent is of importance • Legislation to comply with: The FAIS Act FINANCIAL PRODUCT PROVIDER/SUPPLIER: • Explain the activities • Legislation to comply with: Insurance Act, Long Term Insurance Act and Short Term Insurance Act (Policyholder Protection Rules)
Retail Distribution Channels • What is a distribution channel in insurance • Who would you prefer to sell/market your product • Tied Agent: someone who is paid by an insurance company to sell and give advice only on its financial product/s, not on those of its competitors. • Independent Broker /Agent: An insurance agent that sells insurance policies provided by several different insurance companies rather than a single insurance company
DUE DILIGENCE & GOVERNANCE : Tied Agents: • In your FAIS Licence profile as natural or juristic representatives. • Always check that they still meet their fit and proper requirements • Update your rep register regularly Independent brokers: • Check if they are authorised as FSP’s and authorised for the correct financial product. • Website can assist or • Apply to the FSCA to obtain a weekly data dump. Corporate Governance issues: (Effective Leadership) Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of a company. (Independent Board members, Ethical leadership, strategy development & oversight structures)
CONCLUSION NEW NARRATIVE IN THE BOARD ROOM. QUESTIONS & ANSWERS THANK YOU