21 Apr CHANGES TO THE REQUIREMENTS FOR COLLECTING SHORT TERM INSURANCE PREMIUMS
There have been changes to the Regulations of the short term insurance act, and this impacts the requirements to collect your premiums. If you do not collect or hold a premium, then this does not apply to you.
UP TO 31 MARCH 2019
1. IGF was required only until the end of March. IGF will not need your financial statements for this year. Please ensure that you get this done. After the end of March, no IGF or guarantee is required. You still need PI and fidelity guarantee.
2. You have to get an updated written mandate from the insurer where you collect premiums. There are a number of new provisions which must be included in this mandate. If you did not have the updated mandate by the end of March, both you and the insurer risk penalties.
FROM 28 SEPTEMBER 2019
There are new rules which are going to take effect, and you should start preparing for these now already. You will need an updated mandate from the insurer which includes the following:
(a) the duration of the authorisation and the functions that may be performed
(b) the level and standard of services that must be rendered
(c) the operational requirements that you must meet at all times
(d) the purpose for which premiums may and may not be used
(e) requirements relating to the termination of the authorisation, including an adequate notice period, that take into account the interests of policyholders
(f) the type and frequency of reporting
(g) the manner and means by which the insurer will monitor your performance
The insurance company must motivate that there is no risk to them, and must implement a monitoring plan to ensure that you comply with your responsibilities. They also need a contingency plan to address any non-compliance on your part.
You are going to have to pay all premiums into a separate bank account and keep these completely separate from the business bank account. It cannot just be a book entry, but must be physical separation. This account will have to be audited and you will need to send a Section 19(3) compliance report with your annual financial statements every year.
Premiums paid by EFT must be paid into this account directly, and if cash is received, the cash must be deposited into the account within 1 business day.
1. ENSURE YOU GET AN UPDATED MANDATE FROM THE INSURANCE COMPANY TO COLLECT PREMIUM.
2. YOU WILL NEED TO HAVE A SEPARATE BANK ACCOUNT INTO WHICH SHORT TERM PREMIUMS ARE PAID, AND WHICH IS AUDITED
3. YOU WILL NEED TO DOCUMENT AND IMPLEMENT AN UPDATED PROCEDURE AROUND HOW PREMIUMS ARE COLLECTED, PROTECTED, AND PAID OVER TO THE INSURERS WITHIN 15 DAYS OF MONTH END.