I will be publishing a number of blogs to try and help policyholders (or potential policyholders for that matter) understand the ins and outs of the Regulation that protects the South African Insurance market.
I am sure we have all had that one friend or family member that has had the unfortunate experience of taking out an insurance policy, diligently paying for it, and when the time comes to claim, the Insurance Company repudiates (a fancy word for “we not paying”) the claim, hell it has even happened to me! This event has played out far too many times in SA, in fact across the globe, so legislation and regulation has been introduced and improved over the last few decades.
While there is a bunch of legislation, called Acts, which govern and regulate the industry, people simply don’t have the time to wade through all this material, generally hundreds and hundreds of pages of legal eagle jargon, to actually understand how they are protected.
In Part 1 we will discuss the Financial Services Board (FSB).
The FSB was set up by government to protect the interests of the public around financial services that exclude banking services. They were established around 20 years ago and have created a lot of stability in the non-banking financial services sector. They are fully funded by fees that all insurance companies and financial service providers pay them so that they too can belong to the industry.
Well what on earth does that mean for you and I, the man on the street that just wants to ensure he has enough cover for those rainy days…? Simply put, they design and implement laws that ensure that the companies that develop financial products or the people they employ/partner with to market and sell these products, all meet certain requirements so that the interest and needs of the public consumer at large are protected.
An example would be something like this, a business, let’s call them Real People, wants to sell a Life Insurance Policy that they believe will help the consumer. Before Real People can even start selling their product, they will need to obtain a Licence, from the FSB, that authorises them to be a Long Term Insurance Company, to obtain this licence Real People will need to meet some very strict conditions and a huge financial commitment as the FSB wants to make sure the business will have more than enough money to protect the needs of all the Policyholders. This process can take several months as the FSB will visit the business and do all the checks and balances to ensure that Real People is a well-established business and will not be some fly by night business! Once Real People have obtained their licence they would then be allowed to start the process of developing their Life Insurance product. It doesn’t stop there, but we will pick that up in future blogs…
The morale of this post is that as a consumer always be sure that whether you are signing up for a Medical Aid, Retirement Annuity, a Life policy or any other financial product, make sure it is backed by an authorised Company, and don’t be scared to contact the FSB to confirm a Company’s authenticity to sell financial products.
You may visit the FSB website on https://www.fsb.co.za/Pages/Home.aspx
Thanks for taking the time to read this and be sure to give me feedback or even leave your comments.