The FSCA has published Communication 22 of 2020 (Insurance) to inform stakeholders that two draft general exemptions have been published for comment. The communication sets out the background and current approach and thinking of the FSCA and requests stakeholders to submit comments by 15 May 2020.
In April last year the FSCA published a position paper setting out proposals on the future regulatory framework for the collection of insurance premiums which confirmed that the FSCA strongly encourages a shift towards direct collections becoming the default rather than the exception.
These included:
| ● | identification and classification of premium collection related activities and the determination of appropriate remuneration for such activities; |
| ● | criteria for qualifying intermediaries who wish to collect premiums on behalf of insurers; |
| ● | treatment of premiums as trust monies; |
| ● | reduction in the allowable period for the remittance of premiums by third parties; and |
| ● | interim remuneration arrangements for intermediaries who perform premium collection related activities in direct collection models. |
The draft exemption notices are aimed at giving effect to the above proposal by facilitating the payment of remuneration to an independent intermediary where premiums are collected directly into the account of an insurer and the technological systems of the independent intermediary enable the direct collection method.
The draft exemptions also include distinct conditions to which any insurer and intermediary intending to rely on the exemptions must comply.
To enable the FSCA to monitor and supervise the application of these exemptions, the notices require supervisory notification at least 30 days prior to entering into any agreements in terms of which any remuneration in addition to commission is being offered to an independent intermediary for the performance of ‘accounting for premiums’ in the direct collection model.
In order to understand and comment on the draft exemption notices the FSCA published the following:
