Insurance Bill to get transformation emphasis
Legalbrief Today reports:
The Treasury has agreed to changes to the Insurance Bill in a bid to accelerate the transformation of the industry. A Business Day report says this follows criticisms made during hearings on the Bill. Black business said it would reinforce barriers to entry in the sector, and MPs across the political spectrum supported this view. The Black Business Council and four black-owned insurance companies complained that the licensing conditions, high audit and actuarial fees, excessively demanding standards and a heavy regulatory burden served to exclude black players from the market.
A delegation from the Treasury and Financial Services Board said in making the amendments, policyholder-protection and the need for strong regulation had to be balanced with transformation. The objectives of the Bill have been amended so that they state explicitly that they are to be achieved in a manner that is consistent with the Constitution and with reference to transformation of the insurance sector. Transformation has been defined in reference to the Broad-Based Black Economic Empowerment Act. Amendments have been made to the section on licensing so that applicants for licences would need a ‘clear plan to meet transformation objectives’.
A source that I approached for comment on the article was reluctant to speculate on whether this may lead to delays in the introduction of certain RDR proposals.
The FSB’s “Status Update: Retail Distribution Review – status as at December 2016” (at page 44) states: "The FSRB is currently at a relatively advanced stage of the legislative process and it is hoped that it will be promulgated by the end of the first quarter of 2017."
The Insurance Bill was tabled on 28 January 2016, while the FSRB was being processed by the Select Committee on Finance. The Committee then had clause by clause deliberations on the proposed amendments to the FSRB with the National Treasury and the SARB on the 3rd of May 2017.The Insurance Bill now needs to be revised to be properly aligned with the FSRB.
I think the Insurance Bill has still some way to go and I would not like to make any predictions in this regard. However, all the signs seem to indicate that the FSRB is close to completion and, once signed into law, will be the legislation that will bring about the greatest number of changes that have been tabled in the various RDR proposals.
Paul Kruger: Moonstone Compliance (Pty) Ltd
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