An unlicensed direct insurer, Model Insurance, who claims to have been doing business since 2007, is currently under investigation by the Regulator.
Their activities came under the spotlight after their alleged failure to pay claims was reported to the Daily News in KZN, and Wendy Knowler wrote an article titled “Not a Model Insurance Company”, highlighting their activities – or rather, the lack thereof.
The Consumer Alert column of the paper reported that Model Insurance was selling short-term insurance “…despite having never been registered with the FSB and not being underwritten by a registered insurance company, as required by law.”
The Model Insurance website states the following:
Model insurance was established in 2007 with a user friendly telephone method of insurance. It is still like this today and continues our key to success. Instead of using the usual complicated insurance industry jargon, we have used plain English to make things a whole lot easier as possible.
In a follow-up article published on 9 September, Barry Taylor, chairman of the Short-term Insurance Executive Committee at the Financial Intermediaries Association of Southern Africa (FIA) is quoted as saying:
While we commend the FSB (Financial Services Board) for promising swift enforcement action today, that action is two years overdue for the clients that have been religiously paying their insurance premiums while patently uninsured.
The article also says that the FSB, in reaction to complaints from clients, referred the matter to the police for investigation early last year. It continues:
After submitting last week’s column, I learnt from FSB spokeswoman, Marrelie Victor, that the board had issued a “public warning to consumers” in April last year.
That being news to me, I asked her what form that warning had taken. “A notice was placed in the Daily Sun newspaper,” she replied.
According to the article, the FSB spokesperson disagreed with the FIA statement quoted above:
“The registrar has acted reasonably and decisively in this matter,” she said.
“The unlawful conduct of Mr de Wet was referred to the South African Police Service as far back as February 2012, and the registrar has continuously co-operated with the SAPS in progressing the investigation.
“Subsequently, as you are aware, the registrar, also in 2012, issued a public warning in respect of conducting of business with Mr de Wet.
“Due to the challenges in bringing the matter to the criminal courts and new information that has recently emerged, the registrar is considering alternative remedies.”
I was unable to find a copy of the public warning referred to above. These warnings are normally issued as media releases and published on the Regulator’s website.
Responding to a further enquiry from the FIA, the FSB stated: I confirm (that) we are taking steps against Model Insurance.
