Joint Communication 1 of 2018: Status of Instruments Under the Long-term and Short-term Insurance Acts

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue 25 June 2018] Long-term and Short-term Insurance Acts, 1998 Joint Communication 1 of 2018 Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 Objective of this communication This communication sets out the status of all instruments issued under the Long￾term and Short-term Insurance Acts, 1998, from the effective date of these Acts up to 1 July 2018. The instruments include Directives, Board Notices, Insurance Notices, Information Letters and Guidance Notes, but excludes Regulations and Policyholder Protection Rules made under these Acts, and Information Requests issued under these Acts.
Table of Contents

1. Application ........................................................................................................... 1
2. Purpose ............................................................................................................... 1
3. Background ......................................................................................................... 2
4. Application of instruments.................................................................................... 2
5. Annexure ............................................................................................................. 3
6. Application
   This communication is relevant to all insurers registered or deemed to have been registered under the Long-term Insurance Act, 1998 (Act No. 52 of 1998) (LTI Act), the Short-term Insurance Act, 1998 (Act No. 53 of 1998) (STI Act), or both, as the case may be, including where the registration of insurers is subsequently converted to a license under the Insurance Act, 2017 (Act No. 18 of 2017) (Insurance Act) in accordance with item 6(2) of Schedule 3 of the Insurance Act, and persons licensed under the Insurance Act.
7. Purpose
   This communication sets out the status of the following instruments issued under the LTI Act and the STI Act on and after the effective date of the Insurance Act:
    Directives;

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018]  Board Notices;  Insurance Notices;  Information Letters; and  Guidance Notes. This communication does not relate to Regulations and Policyholder Protection Rules made under these Acts, and Information Requests issued under these Acts.
3. Background
The LTI Act and STI Act, pre 1 July 2018, provide for both the prudential and conduct of business legislative frameworks for insurers prior to effective date of the Insurance Act. Over the course of a number of years, various instruments were issued under the LTI Act and STI Act to facilitate the administration of the aforementioned Acts. These included Directives, Board Notices, Insurance Notices, Information Letters and Guidance Notes. Post 1 July 2018, the Insurance Act provides for the prudential legislative framework for insurers. The commencement date of the Insurance Act is 1 July 2018. The Insurance Act repeals all prudential requirements currently provided for in the LTI Act and STI Act. The remaining sections of the LTI Act and STI Act will provide the conduct of business legal framework for insurers pending the enactment and implementation of the envisaged Conduct of Financial Institutions Act. Post 1 July 2018, the Financial Sector Conduct Authority is the responsible authority for the LTI Act and STI Act and the Prudential Authority is the responsible authority for the Insurance Act. This means that not all the instruments issued under the LTI Act and STI Act will remain in force or be relevant post 1 July 2018. This communication, in the Annexure, therefore sets out which of the instruments –  remain in force;  are withdrawn / lapse on the effective date of the Insurance Act; and  are no longer relevant.
4. Application of instruments
Instruments that remain in force may contain references to – (a) sections in the LTI Act and STI Act which have been repealed by the Insurance Act; (b) other instruments that have been withdrawn / lapsed as indicated in the Annexure to this Notice (e.g. Directive 159.A.i); and (c) specific requirements in the Regulations and Policyholder Protection Rules under the LTI Act and STI Act that have been removed or replaced by a new or similar requirement through the Tranche 1 and/or 2 amendments to the Regulations and Policyholder Protection Rules under the LTI Act and STI Act. A reference referred to in paragraphs (a) and (b) above as well as a reference to a specific requirement that has been removed, as referred to in paragraph (c), and which has not been replaced by a similar requirement, must be interpreted as being

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] obsolete. A reference to a specific requirement that has been replaced by a new or similar requirement as referred to in paragraph (c) must be interpreted as a reference to the new or similar requirement.
5. Annexure
The status of instruments issued under the LTI Act and the STI Act on the effective date of the Insurance Act is set out in the Annexure.

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] Annexure

1. Directives
   1.1. The following Directives under the LTI Act and STI Act remain in force:
   1
   55.A.i (LT,ST&LL) Placement of insurance outside the Republic 119.A.i (LT) Section 54: Limitations on provisions of certain long-term policies 135 1/2001* Legal and administrative requirements for the substitution of certain compulsory annuity policies:
   section 37(2) read with section 3(2)(a) of the Long-term
   Insurance Act, 1998
   135A* Long-term Insurance Act, 1998: section 37(2) - transferability of compulsory linked annuity policies 149.A.v (ST&LL) Placement of Short-term Insurance Business with Entities not registered in South Africa to Conduct Insurance Business 151.A.i (ST)* Reporting requirements prior to termination of binder agreements and related unilateral cancellation of short￾term insurance policies 157.A.i (LT)* Guidance on guaranteed and partially guaranteed policy benefits for purposes of regulation 28(8)(b)(iii) of the Regulations made under section 36 of the Pension Funds Act No. 24 of 1956 *The Directive remains in force and will be reassessed during 2018.
   1.2. The following Directives under the LTI Act and STI Act are withdrawn / lapse on
   the date stipulated in the last column:
   Directive Date
   Withdrawn /
   Lapsed
   1 (RAF) Application of the Short-term Insurance Act No. 53 of 1998 to the Road Accident Fund and matters related to the implementation of certain provisions of the Financial Supervision of the Road Accident Fund Act 1 July 2018 1.A.i (LT&ST) Standing approval to directly borrow money in terms of section 34(1)(c) of the Long-term Insurance Act or section 33(1)(c) of the 1 July 2018

1 Paragraph 4 of the Joint Communication applies where the directive contains incorrect referencing or contains a provision for which there is no corresponding provision in the Insurance Act.

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] Short-term Insurance Act 53.A.i (LT) Approval of appointment of statutory actuary / statutory actuaries as directors of long-term insurance companies 1 July 2018 97.A.ii (ST) Motor vehicle warranty and extended motor vehicle warranty cover 1 July 2018 101.A.i (LT&ST) Directors and managing executive 1 July 2018 106.A.i (LT&ST) Increase of a percentage of the investment limits 1 July 2018 112.A.i (LT) Credit insurance schemes 1 July 2018 112.B.i (ST&LL) Credit insurance schemes 1 July 2018 126.A.i (LT&ST) Policy regarding assets held on behalf of registered insurers in terms of section 34(1)(b) of the Long-term Insurance Act and
section 33(1)(b) of the Short-term Insurance
Act
1 July 2018
127.A.i (LT) Cross border business 1 July 2018 127.B.i (LT) Insurance business carried on by an off￾shore branch of a locally registered insurer 1 July 2018 132.A.ii (LT) Interpretation of section 49 of the Long-term Insurance Act, 1998 1 July 2018 138.A.i (LT&ST) Public officer / management of compliance risk 1 July 2018 140.A.ii (LT) Prescribed requirements for the calculation of the value of the assets, liabilities and capital adequacy requirements (“requirements”) of long-term insurers 1 July 2018 140.B.iii (LT) Application of SA GAAP AC133 to the requirements - differences between the annual financial statements and the long￾term insurance return 1 July 2018 141.A.i (LT) Investment in shares of the insurer’s holding company - long-term insurers 1 July 2018 141.B.i (ST) Investment in shares of the insurer’s holding company - short-term insurers 1 July 2018 142.A.i (ST) Calculation of the value of certain kinds of assets of short-term insurers 1 July 2018 143.A.i (LT) Investment portfolios where alternative investment strategies/hedge fund strategies are employed 1 July 2018 144.A.i (LT&ST) Presentation of financial statements in accordance with generally accepted accounting practice 1 July 2018 145.A.i (LT) Disregarding amounts representing negative liabilities in respect of long-term policies when calculating the value of assets according to paragraph 4(iv) of schedule 3 to 1 July 2018

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] the Long-term Insurance Act, 1998 146.A.i (LT) The Application of Linked Policies as Defined in the Long-term Insurance Act, Act 52 of 1998 1 July 2018 147.A.i (LT) Governance of Discretionary Participation Products (DPP) & Principles and Practices of Financial Management (PPFM) 1 July 2018 148.A.i (LT) FIC Compliance and Reporting of Information 1 July 2018 153.A.ii (LT) Maximum causal event charges that may be deducted under Part 5 (Requirements and limitations regarding the values and benefits of policies) of the Regulations issued under the Long-term Insurance Act Withdrawn on the effective date of the amendments to the Regulations where that date is after 1 July 2018, otherwise 1 July 2018 154.A.iii (LT&ST) Guidance on Securities Lending Transactions 1 July 2018 156.A.i (ST) Compliance with Section 45 of the Short￾term Insurance Act No. 53 of 1998, read with Regulations 4.1 to 4.3 of the Regulations issued under section 70 of the Act 1 July 2018 159.A.i (LT&ST) Compliance with sections 9(3)(b)(i) read with sections 12(1)(c) of the Long-term Insurance Act and Short-term Insurance Act, respectively: Outsourcing 1 July 2018 LT Tax Calculation of the value of liabilities according to section 29A of the Income Tax Act, 1962 1 July 2018 1.3.The following Directives under the LTI Act and STI Act are no longer relevant:
134.A.ii (LT&ST) Personal account trading - FSB position paper guidelines 139.A.i (LT) Amendments to the Long-term insurance Act, 1998 139.B.i (ST) Amendments to the Short-term insurance Act, 1998
2. Notices under the LTI Act
2.1. The following Notices under the LTI Act remain in force:
No.63, GG29911
25 May 2007*
Requirements imposed by the Financial Services Board for nominees to operate in South Africa No. 101, GG30392 26 October 2007 Prescribing of Transnet Pension Funds as “Funds” for purposes of the Long-term Insurance Act, 1998 No.LT7, FSCA Conduct of Business Return to Registrar

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] Web site 15 December 2016 No.LT3, FSCA Web site 21 April 2017 Conduct of Business Return to Registrar No.26, GG41459 23 February 2018 Penalty for failure to furnish Registrar with returns etc. No.LT1, FSCA Web site 09 March 2018 Prescribed insurance fees *The Notice remains in force and will be reassessed during 2018.
2.2. The following Board Notices under the LTI Act are withdrawn / lapse on the
effective date of the Insurance Act:
No.186, GG19609
24 December 1998
Certificate of registration
No.1343 GG22907
14 December 2001
Procedure for the imposition of penalties No.95, GG30316 28 September 2007 Documents which a person may inspect or obtain a copy of or an extract from in terms of section 3(4) of the Long-term Insurance Act, 1998 No.457, GG30987 25 April 2008 Determination of an increased maximum amount of benefit to be provided by a "friendly society", as envisaged in section 7(2)(b) of the Long-term Insurance Act, 1998 No.14, GG32916 05 February 2010 Prescribed requirements for the calculation of the value of the assets, liabilities and capital adequacy requirement of long-term insurers No.188, GG34767 25 November 2011 Internal Model Application Process: Pre-application assessment fees No.868, GG37022 11 November 2013 Determination of the maximum amount contemplated in the definition of "assistance policy" No.158, GG38357 19 December 2014 Governance and Risk Management Framework for Insurers No.158, GG38357 14 August 2015 Fit and proper requirements 2.3.The following Notices under the LTI Act are no longer relevant:
No.192, GG40507
15 December 2016
Proposed Replacement of Policyholder Protection Rules No.153, GG40507 01 September 2017 Proposed Replacement of Policyholder protection Rules No.181, GG41237 10 November 2017 Draft determination on "Equivalence of Reward" No.30, GG41473 02 March 2018 Proposed Amendments to Policyholder Protection Rules

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] Notices on the termination of registration of an insurer under section 13(3) of the Long-term Insurance Act* Notices on Returns to Registrar under section 36(1) of the Long-term Insurance Act other than the Notices on Returns to Registrar listed in the
table under 2.1*
The Notices are not individually listed in the table.
3. Notices under the STI Act
3.1. The following Notices under the STI Act remain in force:
No.63, GG29911
25 May 2007
Requirements imposed by the Financial Services Board for nominees to operate in South Africa No.ST7, FSCA Web site 15 December 2016 Conduct of Business Return to Registrar No.ST3, FSCA Web site 21 April 2017 Conduct of Business Return to Registrar No.25, GG41456 23 February 2018 Penalty for failure to furnish Registrar with returns etc. No.ST2, FSCA Web site 09 March 2018 Prescribed insurance fees *The Notice remains in force and will be reassessed during 2018.
3.2. The following Notices under the STI Act are withdrawn / lapse on the date
stipulated in the last column:
Notice Date
Withdrawn /
Lapsed
No.189, GG19610
24 December 1998
Certificate of registration 1 July 2018 No.192, GG19610 24 December 1998 Form of guarantee 1 July 2018 No.194, GG19610 24 December 1998 Irrevocable guarantee 1 July 2018 No.1342, GG22907 14 December 2001 Procedure for the imposition of penalties 1 July 2018 No.59, GG29894 25 May 2007 Returns by Lloyd's to Registrar 1 January 2020 No.94, GG30316 28 September 2007 Documents which a person may inspect or obtain a copy of or an extract from in terms of section 3(4) of the Short-term Insurance Act, 1998 1 July 2018 No.458, GG30987 Determination of an increased 1 July 2018

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] 25 April 2008 maximum amount of benefit to be provided by a "friendly society", as envisaged in section 7(2)(b) of the Short-term Insurance Act, 1998 No.30, GG30987 25 April 2008 Return by independent intermediary Withdrawn on the effective date of the amendments to the Regulations where that date is after 1 July 2018, otherwise 1 July 2018 No.28, GG32993 01 March 2010 Prescribed requirements for the minimum amount of the security to be provided by or on behalf of a Lloyd’s underwriter 1 January 2020 No.169, GG34715 28 October 2011 Prescribed requirements for the calculation of the value of assets, liabilities and capital adequacy requirement of short-term insurers 1 July 2018 No.188, GG34767 25 November 2011 Internal Model Application Process:
Pre-application assessment fees
1 July 2018
No.158, GG38357
19 December 2014
Governance and Risk Management
Framework for Insurers
1 July 2018
No.158, GG39095
14 August 2015
Fit and proper requirements 1 July 2018 3.3.The following Notices under the STI Act are no longer relevant:
No.192, GG40507
15 December 2016
Proposed Replacement of Policyholder Protection Rules No.153, GG40507 01 September 2017 Proposed Replacement of Policyholder protection Rules No.30, GG41473 02 March 2018 Proposed Amendments to Policyholder Protection Rules Notices on the termination of registration of an insurer under section 13(3) of the Short-term Insurance Act* Notices on Returns to Registrar under section 35(1) of the Short-term Insurance Act other than the Notices on Returns to Registrar listed in the tables under 3.1 and 3.2* *The Notices are not individually listed in the table.
4. Information Letters under the LTI Act and STI Act
4.1. The following Information Letters under the LTI Act and STI Act remain in force:

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] 3/2008 (LT&ST) 28 Jul 2008 Prohibition on inducements - Declaratory judgment 1/2012 (ST) 18 May 2012* Requirements of the Short-term Insurance Act No. 53 of 1998 in respect of insurance offered by persons acting in the capacity of a bailee (such as couriers and transporters) 3/2013 (LT&ST&LL) 01 Jul 2013* Binder regulations: guidance on activities that constitute binder functions, activities that are incidental to binder functions and remuneration payable as a binder fee 3/2014 (LT&ST) 17 Oct 2014 Key Findings: Complaints Management Thematic Review The Information Letter remains in force and will be reassessed during 2018.
4.2. The following Information Letters under the LTI Act and STI Act are either
withdrawn or no longer relevant on the effective date of the Insurance Act:
1/2004 (LT,ST&LL)
30 Jan 2004
Electronic communication
2/2004 (LT,ST&LL)
30 Jan 2004
Directives
3/2004 (LT,ST&LL)
30 Jan 2004
Information letters
4/2004 (LT)
26 Mar 2004
Long-term tax directive: calculation of the value of liabilities according to section 29A of the Income Tax Act, 1962 5/2004 (ST) 29 Apr 2004 Directive 142.A.i (ST) - calculation of the value of certain kinds of assets of short-term insurers 6/2004 (LT,ST&LL) 31 Aug 2004 Prescribed long-term and short-term insurance fees 2/2006 (LT&ST) 20 Dec 2006 Service level commitments by the Registrars of Long￾term and Short-term insurance 3/2006 (LT) 21 Dec 2006 Requirements for minimum values where contractual changes are made to savings policies 2/2007 (LT) 26 Mar 2007 Amendments to Part 3 of the Regulations under the Long-term Insurance Act; Special provisions concerning commission on replacement policies 1/2008 (LT) 07 May 2008 Notices issued under the Long-term Insurance Act 2/2008 (ST) 07 May 2008 Notices issued under the Short-term Insurance Act; and amendment of Part 4 of the Regulations under the Short-term Insurance Act 4/2008 (LT) 12 Sep 2008 Amendments to Part 3 and Part 5 of the Regulations under the Long-term Insurance Act, 1998 5/2008 (ST) Notice to brokers and policyholders regarding

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] 02 Dec 2008 insurance business placed with insurers through Silvex 272 cc trading as Niche Administrators 2/2009 (ST) 25 Mar 2009 Notice to brokers and policyholders regarding insurance business placed with insurers through Silvex 272 cc trading as Niche Administrators 8/2009 (LT&ST) 04 Dec 2009 Solvency Assessment and Management regime 2/2010 (ST) 01 May 2010 Appointment of statutory actuaries by short-term insurers 2/2011 (LT&ST) 20 Oct 2011 Legislative and other developments affecting third party cell captive arrangements 6/2011 (LT&ST) 24 Oct 2011 Restructuring of the Insurance division of the Financial Services Board with effect from 1 October 2011 3/2012 (LT&ST) 19 Jul 2012 Market practices relating to the payment of fees 4/2012 (LT&ST) 09 Jul 2012 General approval for the amendment of certain provisions in the Memorandum of Incorporation (previously known as the Memorandum and Articles of Association) of insurers 6/2012 (LT&ST) 20 Dec 2012 Service level commitments by the Registrar of Long￾term and Short-term insurance 7/2012 (LT&ST) 30 Nov 2012 Implementation of directive 159.A.i (LT&ST) relating to outsourcing: extension of date, clarification of notification requirements and amendments to the notification form to be submitted 8/2012 (LT&ST) 04 Dec 2012 Binder regulations: guidance and supervisory approach 1/2013 (LT) 04 Feb 2013 Treatment of deferred tax liabilities relating to goodwill (intangible assets) that arise from the transfer of a portfolio of insurance policies referred to as “present value of in-force business” and negative rand reserves for statutory reporting purposes 4/2013 (LT&ST) 10 May 2013 Clarification on the application of section 11(3)(b) of the Companies Act No. 71 of 2008 to registered insurers 6/2013 (LT&ST&LL) 10 Sep 2013 Binder Regulations: System changes required to comply with Regulation 6.3 of the Binder Regulations 8/2013 (LT&ST) 11 Oct 2013 Closing date for applications under the Long- and Short-term Insurance Acts requiring consideration and approval by 31 December 2013 9/2013 (LT) 15 Nov 2013 Increase in the amount contemplated in the definition of "assistance policy" in section 1(1) of the Long-term Insurance Act No. 52 of 1998

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] 4/2014 (LT&ST) 10 Nov 2014 Amendments to the Income Tax Act No. 58 of 1962:
Effect on "Income Protection Policies" issued under the Long-term Insurance Act No. 52 of 1998 and Short￾term Insurance Act No. 53 of 1998 2/2014 (LT) 29 Aug 2014 Conducting of insurance business in respect of assistance and life policies through co-administration agreements (also referred to as profit sharing or 80/20 agreements) 2/2015 (LT&ST) 18 Mar 2015 Notice on the Governance and Risk Management Framework for Insurers, 2014: Exemptions 5/2015 (LT&ST) 15 December 2015 Binder Regulations Thematic Review: Key Findings Report 2/2016 (LT&ST) 22 February 2016 Clarification of the type of consumer credit insurance products in respect of which information must be provided and extension of deadline for submission of the information 4/2016 (LT&ST) 12 September 2016 Standing approval under section 24 of the Long-term Insurance Act No. 52 of 1998 and section 23 of the Short-term Insurance Act No. 53 of 1998 for the issuance of shares by or a change in capital structure of cell captive insurers 5/2016 (LT&ST) 12 September 2016 Request for information on new and existing third party cell captive arrangements *The Information Letter is withdrawn in respect of any tax assessment period that ends after 1 July 2018. The Information Letter is withdrawn on the effective date of the amendments to the Regulations where that date is after 1 July 2018, otherwise 1 July 2018.
5. Guidance under the LTI Act and STI Act
5.1. The following Guidance Note under the LTI Act and STI Act remains in force:
Guidance Insurance Conduct of Business Returns: Guidance Note 5.2.The following Guidance Notes under the LTI Act and STI Act are withdrawn / lapse on the effective date of the Insurance Act:
Guidance Note Guidelines for registration as a long-term or short-term insurer in terms of section 9(1) of the Long-term Insurance Act or the Short-term Insurance Act, including Guidance for the completion of the five-year business plan projections for long-term and short-term insurers Guidance Note Guidance for variation of conditions of registration as a long-term or short-term insurer in terms of section 11(1)(a) of the Long-term Insurance Act or the Short-term Insurance Act

Joint Communication 1 of 2018: Status of instruments issued under the Long-term and Short-term Insurance Acts post 1 July 2018 [Date of first issue: 25 June 2018] Guidance Note Guideline for an arrangement for the transfer of long-term or short-term insurance business where policyholders have been or will be made aware of the nature of the substitution of their liabilities and have signified their consent thereto in writing Guidance Note Guidelines for the transfer of the business of a long-term or short-term insurer in terms of section 38 of the Long￾term Insurance Act or section 37 of the Short-term Insurance Act