Amendments to regulations
On the 15th of December 2017, substantial amendments to the regulations were published. These amendments are effective as of 1 January 2018. Below is a quick summary of what you need to know.
How does this affect you?
If you have not entered into a binder agreement with one or more Insurer, then the answer is “not too much” as the amendments to the regulations mostly affect binder arrangements and the insurer’s obligations when entering into or having previously entered into a binder agreement with a non-mandated intermediary or an underwriting manager or a cell captive structure.
The amendments, however, do place a general limitation on remuneration. Actual commission structures are set out in the regulations.
You can read the STIA and the LTIA regulations sections addressing this part if you want to see the limits.
If you are a binder holder, then the new regulations will affect you quite a bit. The amendments address the following:
- Limitations regarding who the insurer may enter into a binder agreement with. (Many requirements, limitations and prohibitions relating to binder holders must be considered by the insurer)
- Limitations on the remuneration that may be paid for a binder function by the insurer (there are also general principles for determining the remuneration for binder functions)
- Only UMA and cell structures may participate in profits attributable to the policies referred to in the binder agreement
- Governance, risk management and reporting requirements
- Transitional arrangements with respect to implementation dates are available for current binder holders.
The Regulations also address accident and health policies, which include GAP cover with a few requirements regarding policy benefits.
The promulgation of the regulations and the Policy Holder Protection rules concludes Phase one of the RDR.
Please note that this is a very short summary and if you want to peruse the full amendments, they can be found on the FSB website.